
*>. * O H O V 










,* VV V 

A 







* x ^° ^^ - 












7s* A 




^" *** a. 








< o 












4 o 

"V #M ^ •. 

•4? 














V V * y * °* c 



^ 











y 7 * 






*^ -.« 





• G* *o -T^ A <" 



V? ; Jill: 1 






*' 













*. 








^j> * o N o ° ^r 







*>s* 



<T *W2^V %,. C v ..isSJ^l*- "o .4* *W?^ "*, 



o > 



tftfftw 












4 o 



The Beginnings of 

the Cincinnati 
Southern Railway 

H. P. Boydcn 



##&&,*&&&# 



y 



31 






1 



THE BEGINNINGS 



OF THE 



Cincinnati Southern Railway 



A Sketgh of the Years, 1869-1878 



By H. P. BOYDEN 



"Very few improvements pay for themselves within the time 
anticipated. For one case like the Erie Canal, which did better than 
its promoters expected, we have a hundred cases which fail to pay 
for themselves at all, and which leave a burden of interest with no 
real increase of the means of repayment." — Hadley^s Economics. 



CINCINNATI 

THE ROBERT CLARKE COMPANY 

1901 






TWUlttARY OF 

CONGRESS, 
Two Copies Received 

DEC Q '1901 

C6PVRI0HT ENTRY 

< felts s 1-H°t 

CLASS o^XXa Mo. 

C©IPT 'J. 



COPYRIGHT, I9OI, BY 
H. P. BOYDEN. 



• • »•••••• • ••••••• 

•• •••••••••• ••••• • 

*••*. • ••• •* • ••* *•• • *•" 



BY WAY OF PREFACE. 



Cincinnati decided to build the Southern Railroad by 
a vote of a little more than ten to one. L,ast Tuesday, 
November 5, it decided to extend for sixty years the lease 
made October 12, 1 881, by a vote of a little more than three 
to one. It seems to me that few can read the story of the 
critical period of Cincinnati's history as set forth in the 
various extracts which follow, and not be inclined to won- 
der that the vote to extend the lease did not bear the same 
ratio to the vote not to extend, that the vote to build did to 
the vote not to build. Still, it is to be said that the majority 
in favor of extension was larger than the total vote cast at 
any time on the issue of bonds during the construction of 
the railroad, and more than twice as large as the total vote 
cast for the first issue of bonds. 

In municipal life experiences are soon forgotten. Kach 
generation of voters has to tread the dusty path its predeces- 
sors have trodden ; though progress is chiefly possible only 
as the lessons of experience sink deep into the minds of 
men. Although the election of 1901 turned on other points 
than experience, there were not a few who were controlled 
in their decision by what they remembered, more or less 
dimly, of the history that is herein recalled. 

No one can doubt the exact and conscious purpose 
Cincinnati had in view in undertaking the building of the 
Southern Railroad. It was to help directly the commercial 
and manufacturing interests of the City, and so indirectly 
to promote the general welfare and growth. The whole 
body of taxpayers, as represented by the voters, undertook 
the construction — and the burden. 

(iii) 



iv By Way of Preface. 

In the election which has just taken place, one may- 
doubt whether the controlling factor was not a half con- 
scious, or perhaps an entirely unconscious, realization that 
the Southern Railroad no longer presents the simple ques- 
tions of construction and grim endurance, but the compli- 
cated and delicate questions arising out of bonded indebted- 
ness and the relations of lessor and lessee. The final outcome 
of the Southern Railroad now depends on the management of 
the Debt, and the use that is made of annual excess of in- 
come over interest. The laboring oar which for more than 
twelve years was held by the Southern Railroad Trustees 
must henceforth be held by the Trustees of the Sinking 
Fund. 

This at least may be said with confidence : The City 
acted as if it fully comprehended the new phase of the 
Southern Railroad question. It bided its time, and finally 
voted to extend the lease just before $8,138,000 of high- 
interest bearing bonds were about to become due It has 
grasped the opportunities of a period of unexampled pros- 
perity — when railroad properties are selling higher than 
ever before known. It has done for itself what the greatest 
of railroad corporations have done, and are doing, for them- 
selves. The municipal reasoning, intelligence, instinct — 
call it what you will — was as true as the judgment of the 
greatest financiers of the country. If the City is wrong, 
they are wrong. 



The most valuable single source of information on the 
Cincinnati Southern Railroad is the ' ' Report of the Investi- 
gating Commission," dated January 14, 1879. This has 
been freely quoted from in this sketch. 

The pamphlet by Mr. J. H. Hollander, entitled "The 
Cincinnati Southern Railway : a Study in Municipal Activ- 
ity," is of great interest, and no student of Southern Rail- 
road history can afford to neglect it. It is the twelfth in 
the series of Johns Hopkins University Studies. It brings 
the history of the road down to 1894. A bibliography is 



By Way of Prefaee. v 

published at the end which embraces no less than 107 
references, and is mute testimony to the painstaking re- 
search of the author. 

A pamphlet by Mr. S. H. Goodin was published in 
the early part of 1868. This gives a general account of 
the efforts of Cincinnati to secure a Southern outlet before 
the last and successful effort was made in 1869, through 
the Ferguson act. 

Mr. Thornton M. Hinkle delivered an address before 
the Cincinnati Bar Association on April 16, i9oi,in which 
is told the story of Southern Railroad movements between 
1835 and 1856. It shows careful study, and close exami- 
nation of contemporaneous authority. 



1 ' The history of the railway, ' ' says Mr. Hollander, 
1 'can onty be intelligently understood in the light of a small 
but persistent residuum of local hostility, largely responsible 
for the frequent vacillation of public opinion, and for the con- 
sequent delay in the completion of the road." 

It was this remark that led to the examination of 
newspaper files and various documents which are referred 
to in the sketch that follows. 

H. P. BOYDBN. 

Cincinnati, November 9, 1901. 



CONTENTS. 



By Way of Preface: , .... 
i. The Vote for Ten Millions, 

2. First Obstacles, 

3. The Cost of the Road and the Discussion of 

1872, . . 

4. Getting Ready to Work, 

5. Letting the First Contract, 

6. Bonds Negotiated and Work Prosecuted 

7. What Mr. Scarborough Found, 

8. The Six Million Issue, 

9. The Dirr Amendment, 

10. A Mayor's View, 

11. Selling More Bonds, . ... 

12. Organizing the Common Carrier Company 

13. Getting Ready for Two Millions More, 

14. The Critical Year of 1878, 

15. The Founder of the Road, 



Appendix — Mr. Ferguson's Address of April 

18, 1877, . . .117 



The Beginnings of the Southern Railway 



i. 

THE VOTE FOR TEN MILLIONS. 

The Commission appointed in 1878 " to investigate the 
affairs of the Trustees of the Cincinnati Southern Railway," 
said towards the end of their report, "There were probably 
few persons who voted in 1869 ' to provide the line of railway' 
who would have done so in anticipation of an expenditure 
of eighteen millions of dollars, and a lapse of ten years 
before its completion." 

As one looks back over the history of the tremendous 
undertaking, the gay and almost reckless confidence of the 
voters of 1869 seems well nigh incredible. The few notes 
of warning that were thrown out were all but unheeded in 
the presence of a great popular impulse. For thirty years 
Cincinnati had been talking about a Southern railroad. The 
Ferguson Bill found the popular mind prepared to welcome 
any plan that promised successful resistance to legal attack. 

The Ferguson Bill was first published November 25, 
1868. The newspapers, without exception, endorsed it. 
The importance of the road in affording a Southern outlet 
was dwelt upon, and the Gazette urged the constitutionality 
of the bill on substantially the grounds on which later the 
Supreme Court upheld it. But after a few days editorial 
and popular attention drifted away to matters of immediate 
interest. 

The General Assembly met early in January, 1869, but 
it was three months before the bill was introduced. As far 
as appears from the newspapers of the day, very little was 
said or done publicly about the measure till about the middle 

(5) 



6 The Beginnings of the Southern Railway. 

of March. On the first day of January, 1869, one who 
signed himself ' ' Citizen ' ' wrote to the Commercial that 
* ' there is an individual — one who would be recognized as 
eminently competent to do the work — ready to enter into 
bonds to finish the work within eighteen months for a bonus 
from the city of $1,500,000." On February 10th, an ad- 
dress by Judge Hoadly was published, on " Future Cincin- 
nati," delivered in the Theological Library Course, in the 
course of which he referred to the proposed road as one of 
the influential factors in the future growth of the city. The 
wish of the city seemed to be taken for granted. The time 
to give formal expression to it had not arrived, but as no 
doubt was felt that that formal expression could be obtained 
when needed, it was considered unnecessary to urge the city 
to do what it wanted to do. 

While little or nothing was doing in Cincinnati, an effort 
was made in Columbus by those who were opposed to the 
plan of municipal construction proposed by the Ferguson 
Bill, to secure an amendment to the State Constitution by 
which Cincinnati might be enabled to lend its credit to private 
enterprise. An amendment to this effect was presented to 
the General Assembly, but failed of passage. Sentiment in 
favor of the Ferguson Bill was strengthened, and about the 
middle of March the movement to give expression to the 
wishes of Cincinnati began, in a meeting of the Board of 
Trade at Hopkins Hall. The endorsement of the Board of 
Trade, the Chamber of Commerce, and the City Council 
quickly followed. 

The only active critic, or opponent, of the plan of the 
Ferguson Bill at that time was Judge Dickson. On the 19th 
of April the Board of Trade, after several meetings for dis- 
cussion, decided to endorse the Ferguson Bill, and appointed 
a committee to visit Columbus " in the interests of the city." 
Two days later Judge Dickson wrote a lengthy communica- 
tion which was published in the Commercial. In the course 
of it he referred to a plan he had suggested a month before, 
to give one million dollars to a private individual to build the 



The Vote for Ten Millions. 7 

road, "to be paid only upon the completion of the road," 
arguing that this plan was as constitutional as that proposed 
by Mr. Ferguson. Then he proceeded thus : 

Who ever before heard of a city undertaking so gigantic an enter- 
prise, involving the employment of thousands of agencies in addition 
to the money required? What opportunities for corruption, for 
bribing, for fraud ; what a gigantic political scheme ! And why run 
all this risk — this immense unknown expenditure — when a million of 
dollars will do it, without any hazard? Better no Southern railroad 
than on these terms. 

The following day Mr. Josiah Kirby, of the Board of 
Trade, replied to Judge Dickson. He said : 

The gentleman must remember that within the last three years 
the citizens of this city raised $1,250,000, which was offered to any 
company that would build the road within a given time. That mu- 
nificent offer was not accepted, and it is not now reasonable that the 
million would be. I believe that if we were to lose ten millions of 
dollars and have a good road to connect with the Southern System of 
roads, over which we could have control, our gain would be beyond 
all calculation. Let us all unite in putting the Ferguson Bill through, 
and we shall soon have the road. " United we stand, divided we fall." 

The proposition of Judge Dickson attracted some atten- 
tion. The plan was his ; the bill accompanying it, and 
which went before the Judiciary Committee of the Senate, 
the work of Judge Gholson. The Co?nmercial said of it : 

His plan has received much consideration. If it could be made 
practicable we would prefer it. The Ferguson Bill is received with 
favor only because the impression prevails that it is the most substan- 
tial proposition. 

The Gazette said : 

The city authority can build the road as economically as a com- 
pany, and can save the cost of financiering. It may be made to pay fair 
returns and to take care of its own bonds. Even if it comes short of 
this, a million is a pretty large margin to go upon, and Judge Dick- 
son's plan is to throw in a million as a bonus. 

The Enquirer remarked, as to the cost of the road 
under the Dickson plan and that proposed by the Ferguson 

Bill: 

It is safe to say that a sum to be raised by the bonds of the city 
whose interest would not equal $100,000 a year would be all that is 



8 The Beginnings of the Southern Railway. 

requisite for the completion of the road. That $100,000 would not be 
felt in the increase of taxes. The men who in this city are able to 
build it by voluntary subscription will not, from motives of short- 
sighted economy. The only way in which these capitalists can be 
reached, and be made to aid in a great public improvement, is by cor- 
poration and city legislation. 

Judge Dickson continued to urge his plan in communi- 
cations to the daily newspapers, but it is evident that public 
opinion had crystallized about the Ferguson Bill. The day 
before the passage of the bill by the Senate the Enquirer 
said : 

With a unanimity we have never seen equaled, as expressed in 
the press, in the Council, in the Chamber of Commerce, in the Board 
of Trade, on the streets, all our citizens of every class and profession 
and condition of life give their approval to the Southern Railway Bill. 

Public sentiment had also fixed upon ten millions of 
dollars as the amount necessary for the building of the road. 
Where the original suggestion came from now cannot be de- 
termined. But there is no doubt that was the figure in the 
public mind. And the General Assembly was as prompt to 
see the drift of public opinion in Cincinnati, both as to the 
necessity of the road and the amount necessary to build it, 
as was the citizen at home. A Columbus correspondent 
wired his paper three days before the Senate passed the bill, 
1 ' Some members will vote for it because Cincinnati has said 
through the press and delegations, ' We want the measure, 
and if it should not work well, it is Cincinnati's funeral and 
she can do her own mourning. ' ' ' The same correspondent 
wired the next day that a committee of sixteen Cincin- 
natians had been in conference with the Hamilton County 
delegation, the principal subject of the conference being the 
amount of the bonds, with the general sentiment in favor of 
ten millions. Years later, Governor R. M. Bishop, who was 
in Columbus at this time, testified before the Investigating 
Commission that he and Mr. Ferguson had a talk with Mr. 
Biggs, member of the Senate from Hamilton County, and 
in charge of the bill, during which the question came up as 
to the amount of bonds which should be authorized. ' ' We 



The Vote for Te?i Millions. 9 

will commence with ten millions," said Mr. Ferguson ; and 
that was the amount named in the bill. 

The bill passed the Senate on April 28, 1869, by a vote 
of 23 to 7 — 11 Republicans and 12 Democrats voting for it, 
and 3 Republicans and 4 Democrats against it. "It is 
worthy of mention," said the Columbus correspondent of 
the E?iquirer, "that at no stage of its progress was the 
question of politics introduced or mentioned." The next 
day the bill passed the House by a vote of 73 to 21, and on 
May 4, 1869, was duly signed and became a law — or, rather, 
an enabling act, "operative upon, first, the passage by the 
City Council of a formal resolution declaring the construc- 
tion of a railway necessary, and designating the terminal 
points, and, secondly, upon the subsequent ratification of 
the resolution by popular vote. 

Within a week after the passage of this enabling act 
delegations began to arrive in the city in behalf, respec- 
tively, of Knoxville, Nashville, and Chattanooga as the 
southern terminus of the road. Very full reports of the 
elaborate statements and arguments of the various delega- 
tions were printed in the newspapers. Scarcely a word, 
however, was said on the real, underlying question — Shall 
the city build the road ? That continued to be taken for 
granted. 

About the only note of warning was sounded by "E. K. 
W." in one of the papers. He said "no reliable estimate" 
of the cost of the road had been made, and added, "It will 
be too late to draw back from this business after we' have 
once put it into the enormous sum of ten millions. ' ' 

The E?iquirer referring to this suggestion, said a few 
days later: 

The idea of spending ten millions of dollars even for the long- 
desired Southern Railroad will not, we believe, and certainly should 
not, be entertained for a moment. There is no doubt that a small 
fraction of the sum named in the Ferguson Bill will be sufficient for 
the purpose. 



io The Begijinings of the Southern Railway. 

The theory on which the Enquirer was proceeding w T as 
set forth in an article, in the course of which it was said: 

The worst use that can possibly be made of our ten millions we 
apprehend will be to expend it directly through the Trustees, or other 
city agents, in constructing a railroad. Contract with a responsible 
company for construction on the basis of a lease of the road, after its 
completion, to the bidders, at a nominal rent. 

This suggestion was but a modification of the Dickson 
plan. " If it were possible," said the Gazette, " the citizens 
of Cincinnati might prefer a donation of one million dollars 
to undertaking the proposed job, but this cannot be done." 
So the discussion continued as to the southern terminus, 
and on June 4, 1869, Council passed resolutions declaring 
the road necessary, naming Chattanooga as the southern 
terminus and fixing June 29th as the day for the popular 
vote. 

Two days before the election the Commercial said: 
An overwhelming majority will vote "Aye." We are entering on 
an experiment that is not without points of danger, and it is one 
about which our most judicious citizens have many misgivings ; but it 
is clear that the railroad movement is in itself a good thing, and that 
it must and should go on. 

The Enquirer said the day before the election: 
We must have the road, or fall behind all our rivals in the course 
of our natural progress. We must have it, or else real estate and all 
other kinds of value will rapidly decline in value. Every man, 
capitalist or laborer, mechanic or artist or professional man, should 
turn out to-morrow and vote. 

The Executive Committee of the Board of Trade, 
the Chamber of Commerce and the City Council issued an 
elaborate "Address to Citizens," accompanied by a map. 
It was long and able. It dwelt on the commercial ad- 
vantages to be gained by a new outlet to the south, the vast 
territory which, naturally tributary to Cincinnati, was without 
adequate railroad facilities, and the increased business which 
would come to the merchants and especially to manufacturers, 
and through them, to the whole population. It said: 

The object of the people of Cincinnati in making a southern road 



The Vote for Ten Millions. 1 1 

has several times been set forth in addresses to the public. It is to 
enlarge the market for her manufactures, to extend the arm of com- 
merce to aid in developing a district of country which is naturally 
tributary to this city, and, by accomplishing this, to give greater em- 
ployment to labor and increased value to property. In one word, 
it is to secure greater growth and prosperity to this city. 

Fear not increased taxation. The money expended in building 
the road will return to you in payment for labor unemployed and 
contracts completed. Your city will never have to pay the bonds issued 
for the construction of your road, and probably but little of the in- 
terest. Before the first payment of interest has to be made a portion 
of the road will be in operation and earning money; when the entire 
road is completed the vast amount of traffic will insure the payment 
of interest and the establishment of a sinking fund to liquidate the 
indebtedness. 

The fire bells were rung at six in the morning on 
election day, at noon, and again at three in the afternoon. 
Nine bands of music paraded the streets, and a half holiday 
was generally observed. It was a gala day, and in spite 
of the "misgiving of our most judicious citizens" the 
capitalists and the laborer, employer and employe worked 
together at the polls for what Judge Dickson had called 
the ' ' gigantic enterprise' ' ; for what was afterwards said 
to be " an undertaking as anomalous as it was remarkable." 

When the votes came to be counted there were found 
to have been cast 15,435 for the road and 1,500 against it. 
The total vote was 16,935 — the total vote in the city election 
in the preceding April having been 25,253. It was ex- 
plained that the result was so generally regarded as a fore- 
gone conclusion that not a few who were favorable to the 
measure remained at home knowing that their votes were 
not needed. It cannot be doubted that the vote fairry rep- 
resented the aspirations and purposes of Cincinnati. The 
popular impulse had been from the first too strong to be 
misunderstood. But it is noteworthy that on the most 
momentous and far-reaching question that ever had been, 
and probably ever will be, presented to Cincinnati, only 
about two-thirds of the qualified electors voted. 

General rejoicing followed, and Chattanooga sent word 



12 The Beginnings of the Southern Railway. 

by telegraph that bonfires were illuminating the city and 
cannon firing. 

The Gazette, in it next issue, said: 

Within a week the Trustees will organize and proceed to busi- 
ness, and as soon as possible thereafter the work will be in progress, 
and the Cincinnati Southern Railroad will be constructed as rapidly 
as men and money can accomplish it. The possibility of building this 
important road without any considerable tax upon our citizens will, in 
our opinion, be demonstrated. 

Two days after the election the Enquirer expressed the 
hope ' ' that the Trustees would be able to find responsible 
parties who will contract to build the railroad at an actual 
cost to the city of a comparatively small part of the whole 
sum authorized," and suggested that two or three millions 
at the most should be sufficient. 

Who could then have foreseen that four years would 
elapse, and more, before the first spadeful of earth would 
be dug? That more than ten years would elapes before the 
first through train would be run? That the ten millions 
would be exhausted, six millions more voted, and finally 
another two millions, with the road still incomplete? That 
there would be years when more than $1,200,000 would be 
required to pay the interest alone? That thirty years later 
the income of the road would still be insufficient to meet 
the interest on the bonds? That open talk of repudiation 
would be heard? That the Sinking Fund Trustees would 
feel called upon to give public warning that the burden of 
taxation was approaching close to the point of endurance? 
That a party would carry one election on a declaration that 
it was better to give up even sixteen millions than put an- 
other cent into the undertaking? And that by 1901 the 
total cost of the road to the city would foot up over thirty 
millions of dollars? 

No one dreamed on the night of June 26, 1869, what 
was in store for the city that had so gayly voted, to the 
music of parading hands and the clang of bells, to incur a 
debt of ten millions and go into the railroad business. 



First Obstacles. 13 

II. 
FIRST OBSTACLES. 

On June 30, 1869, four days after the election, the 
Trustees were appointed by the Superior Court. The court 
was composed at that time of Bellamy Storer, Alphonso 
Taft and M. B. Hagans. Judge Storer, speaking for the 
court, said : 

It is proper to remark that the work which the city so far, by 
its constituted authorities, as well as by the voice of its citizens, has 
undertaken to perform, is one that does not depend so much on their 
will thus expressed, as on the ability, morally and financially, of the 
Trustees whom we are now about to appoint, and we have endeavored, 
therefore, to select from the many good men of our city to fill this 
important office those who we believe, from their position in the com- 
munity, and from their known integrity, energy and capacity for busi- 
ness, may safely be confided in. We have endeavored to avoid all 
private interest. It has been our great aim to select those who, we are 
confident, will perform the obligations of their office intelligently, up- 
rightly, and for the benefit of the city and not for themselves. 

Judge Storer then announced the appointment of R. M. 
Bishop, B. A. Ferguson, Miles Greenwood, Philip Heidel- 
bach and William Hooper, and closed by expressing the 
hope that the Southern Railroad would be a new and mutual 
bond between the North and the South. 

The Enquirer said of the appointments: 

We doubt if better selections could have been made, except that 
we should have liked it better if one of the Commissioners had been a 
practical railroad engineer. 

The Commercial said, on July 1st: 

The fact that no one of the Trustees is a practical railroad man 
may have a peculiarity of appearance. The theory is that railroad 
men have interests with which, perhaps, those of the city are not iden- 
tical. The purpose of the city in proceeding to build the Southern 
Railroad, so long wanted, is, if the city understands itself, to have a 
road that will be run for the benefit of Cincinnati, and not to be tribu- 
tary to any particular road or system of roads. Then the Trustees as 
appointed, being free to choose, and without the prejudices and pre- 



14 The Beginnings of the Southern Railway. 

dilections that are acquired "in operating certain lines of roads, can 
employ the best available talent. The aim of the Judges, in appoint- 
ing the Trustees, was, above all things, to obtain a representation of 
the city of high intelligence and perfect integrity — to compose a board 
of men who could not afford to do wrong, or permit wrong to be done. 
Practical railroad men will not be scarce where the work is to do. 

A " Workman," in a somewhat bitter communication, 
maintained that there should have been a workman on the 
Board, for, he said, "the strongest appeals were made to 
the workingmen of Cincinnati' ' on election day, and he held 
that the result of the election was largely due to their 
votes. 

The article in the Commercial on the appointments 
called forth the following comments from the Gazette: 

Consolidation of lines is the order of the day, and this city would 
find its Southern road left out in the cold if it should refuse to make 
the partnership running arrangements which other roads find neces- 
sary to their business. The city has undertaken this work because 
private capital would not. All it asks fe that the road be built. When 
done, whatever management is best for the profits of the road, will be 
best for the interests of Cincinnati. And if there be a way by which 
the Trustees, by lending a portion of this authorized credit upon 
adequate guarantees, or by constructing in the name of city a small 
portion of the road chiefly by private or railroad capital, that is the 
way to take. The object is to get the Southern road with all the aid 
that can be had from other sources, either local or railroad, and with 
the use of the smallest portion of the authorized capital that will se- 
cure the purpose. 

A day or two later, the same paper said: 
The notion that this road is to stand aloof from all railroad alli- 
ances and to dictate terms to the railroad systems of the West and 
South is foolish. 

On July 6, 1869, the Board of Trustees organized by 
electing Miles Greenwood, President, and H. H. Tatem, 
Secretary. Three days later, the Trustees asked the City 
Council for an appropriation of $10,000 to make the neces- 
sary preliminary surveys, stating that they did not deem it 
advisable to issue bonds until they had obtained the con- 
sent of Kentucky and Tennessee for the exercise of their 
powers. 



First Obstacles. 15 

So the weary road was at last begun, and even at the 
beginning, it was apparent that there was clashing of 
opinion as to the way in which the road, when built, should 
be operated; and also a hope that Cincinnati would not 
have to spend the ten millions which had been authorized. 
Nowhere, in public discussions, in reports of committees, 
in editorial comments, does there appear a word to indicate 
that the ten millions would prove quite insufficient. All 
that came later. 

The Trustees employed on August 6, 1869, Mr. W. A. 
Gunn as Chief Engineer, and placed him in charge of the 
preliminary surveys, two sunning parties being placed in 
the field. At the same time preparation was begun to se- 
cure enabling acts in Tennessee and Kentucky. 

Tennessee passed the enabling act on January 20, 1870. 
The Kentucky Senate defeated the bill on March 1, 1870, 
by a vote of 22 to 13; and the House four days later, de- 
feated it 03' 48 to 44. A month later, Mr. Bryant Walker, 
City Solicitor, brought suit in the Superior Court, at the in- 
stance of Mr. K. W. Kittredge, to test the constitutionality 
of the Ferguson Act. On January 4, 1871, the Superior 
Court, in General Term, through Judge Taft, unanimously 
upheld the act. The case was at once taken, on error, to 
the Supreme Court. The next day, January 5, 1871, the 
Trustees again introduced their bill in the Kentucky As- 
sembly, and again met defeat — in the House on January 25, 
1 87 1, by a vote of 44 to 43; and in the Senate on the 9th of 
March, 1871, by a vote of 23 to 12 The opposition to the 
bill before the Kentucky Assembly was characterized by 
Mr. C. B. Simrall, the attorney for the Trustees, as ''the 
most determined and positive that was ever inaugurated 
against any bill before any legislature; there was never such 
opposition to any measure before the Kentucky Legislature 
as there was to this." 

Thus, twice beaten in Kentucky, and the question 
of the constitutionality of the Ferguson Act pending in the 
Supreme Court of Ohio, things drifted along to November, 



1 6 The Beginnings of the Southern Railway. 

187 1, with nothing accomplished, save the work in survey- 
ing, which, of course, was not of a sort that the voters of 
Cincinnati could be informed about, or, if they had been, 
could have formed any intelligent idea of. 

Meantime, there had been certain important railroad 
movements of the then great Eastern lines toward Cincin- 
nati, and there was talk in the newspapers, and especially 
in the Gazette^ of there being, through these lines, not one, 
but two Southern railroads, the idea being that one or more 
of the great systems, would, seeking Southern business, 
either build its own line, or co-operate with Cincinnati and 
that Cincinnati could then get its Southern road by giving 
a part of the ten millions authorized as a bonus. This view 
had been elaborately set forth — it was, as will be noticed, 
in a way, a return to the old view of Judge Dickson — when 
on December 19, 1871, Mr. Theodore Cook introduced, on 
the Chamber of Commerce, a series of whereases and reso- 
lutions, among which were these: 

Whereas, nearly three years have elapsed since the passage of 
the Ferguson law and action of the people, within which time the 
great lines of railroads leading from the seaboard to the West have 
centered in our city with the purpose of making this point a basis for 
extending lines to the West and South, which fact affords reasonable 
grounds for the belief that private enterprise will, at an early date, 
undertake the building of a line of railway from this city to the South, 
therefore, 

Resolved, that the proposition to build the Cincinnati Southern 
Railway, at the cost of the city, is dangerous in precedent and un- 
sound in policy, and that any probable good to result from such action 
would be more than counterbalanced by the depreciated credit of the 
city loaded with debt, and the onerous taxes thereby imposed on the 
city; 

Resolved, that it is the sense of the Chamber that the effort 
now being made to obtain a charter from the State of Kentucky 
should be abandoned; and that the Legislature of Ohio be me- 
moralized to repeal all laws granting to cities of the first class au- 
thority to build railways. 

The Cook resolution gave rise to a long and bitter dis- 
cussion, which lasted several months. 



The Cost of the Road, etc. 1 7 

III. 

THE COST OF THE ROAD AND THE DISCUSSION 

OF 1872. 

It will be observed that the Cook resolutions attacked 
the Ferguson Act, not only on the ground that conditions 
had changed since June, 1869, but that the theory of the 
Act, the building of a railroad by a city — was unsound. It 
was practically the first time the wisdom of the policy had 
ever been questioned. The request for the consideration of 
the resolution was signed by John Kyle, I^ewis Glenn, 
Augustus Wessell, E. Dexter & Sons, Thomas Emery's 
Sons, Richard Martin, Samuel J. Hale and W. J. L,ip- 
pincott. 

Two days after this firebrand was thrown into the 
Chamber of Commerce, Mr. Ferguson wired from Co- 
lumbus that "Chief -Justice Scott of the Supreme Court had 
announced the unanimous opinion of the court in favor of 
the constitutionality of the Southern Railway L,aw. ' ' The 
next day Mr. Bissell introduced in the Board of Aldermen 
a resolution, reciting the Cook resolutions, and requesting 
the Legislature "to repeal the Southern Railway I^awat the 
earliest possible moment," and instructing the City Auditor 
to withhold his signature to any bonds the Southern Rail- 
way Trustees might offer. The resolution was referred to 
the Committee on I,aw and Claims. 

Thus the attack was opened along the line. 

The attack on the Ferguson Act was at once met by 
those in favor of it, by an appeal to the Board of Trade. In 
that body Mr. Macneale introduced resolutions in favor of 
standing by the Trustees. The whereases were as follows: 

Whereas, The construction of such a road will be of inestimable 
benefit to the commercial and manufacturing interests of the city, 
and a means of largely increasing the value of real estate; and 

Whereas, The increased prosperity will enable all classes of our 
citizens to pay the larger- taxes with greater ease than they pay the 
present taxes assessed; and 



1 8 The Beginnings of the Southern Railway. 

Whereas, The credit of our city will be much benefited by the 
increase of commerce, population and taxable property which will re- 
sult from the completion of the proposed railway; therefore 

Resolved, That we render the Trustees all the assistance in our 
power. 

A meeting was held at the Board of Trade rooms on 
December 28th. At that meeting, which was largely at- 
tended, Mr. R. M. Bishop, one of the Trustees, made a few 
remarks, and at the end, read the following letter from 
Chief Engineer Gunn: 

R. M. Bishop, Esq. : In response to your inquiries, I submit the 
following statement in regard to the Cincinnati Southern Railway. 
The distance from Cincinnati to Chattanooga, by the surveys made, 
will range from 333 to 340 miles. The distance by the Kentucky Cen- 
tral Railroad will be 353 to 363 miles. The maximum grade will be 66 
feet to 70, 80, 90 or 100 feet on the different routes, and the curvature 
is favorable. The high grades are confined to the central, or mountain, 
part of the line, and the rest will be much easier. The estimates are 
far enough advanced to enable me to say that the ten million fund 
placed at your disposal by the City of Cincinnati will build the road 
from Cincinnati to Chattanooga. These estimates are based upon rates 
at which I have placed work under contract within the last sixty days, 
and will give a first-class road, worth all its cost. 

(Signed) \V. A. Gunn, 
Chief Engineer, Cincinnati Southern Railway. 

Mr. Bishop said ' ' that his candid opinion was that the 
road could be made and equipped, at the largest estimate, 
for less than twelve millions," and also " that he expected 
to get the right of way for the Southern road without spend- 
ing a dollar." 

The morning of the day when Mr. Bishop read this 
important statement from Mr. Gunn, the Commercial, in the 
course of a long editorial, after speaking of what it called 
"a guess" by General Rosecrans, conveyed in a letter to 
Mr. Ferguson, that "the road should not cost over nine 
millions," proceeded thus : 

The Gazette thinks the road can be built in such a way as not to 
cost Cincinnati over five millions. Our citizens know, of course, that 
the road will cost much more. Whoever may be so sanguine as to be- 
lieve the road might be worth the millions we would put into it, — i. e. % 



The Cost of the Road, etc. 19 

that its stock would be worth par, — there is not a capitalist who will 
say he thinks the investment will be worth fifty cents on the dollar. 
It would be cheaper, therefore, to give away a million or so and get 
the road than to build and own it. We would do well if we received 
three per cent on twenty millions — i. e., if the road, after costing 
twenty millions, would pay six per cent on ten millions. 

The Board of Trade adopted the Macneale resolution, 
pledging to the Trustees the support of the Board, on Janu- 
ary 4, 1S72. A feature of the meeting was a carefully pre- 
pared statement by Mr. A. P. C. Bonte, in the course of 
which he said, three of the Trustees being present : 

We have the statement of the Engineer of the Southern Road 
that the road can be built for a sum inside of ten millions, and that 
this amount contemplates the road complete from Cincinnati to Chat- 
tanooga, and includes iron bridges across the largest streams, and 
wood and iron over the smaller, and also includes the crossing of a 
bridge into the City of Cincinnati. It is the general opinion of those 
acquainted with the subject that the road will pay after completion, 
and for three years at least one-half of the interest on the bonds, and 
for all time beyond that, pay the interest in full and a surplus besides 
for the creation of a sinking fund to take up the bonds. 

With the passage of the Board of Trade resolutions, 
interest was transferred to the Chamber of Commerce. 

The Cook resolutions had been referred to a special 
committee of five, appointed by Mr. C. W. Rowland, then 
President of the Chamber. The committee, unable to agree, 
made two reports. The majority report was in favor of the 
resolutions, and was signed by Theodore Cook, S. Davis, 
Jr., and J. J. Emery. In the course of a lengthy statement, 
the members of the committee said : "If the city builds 
the road, it may some day become a question if it is not best 
to give it away and be rid of it. We feel we hazard nothing 
in saying that when this road is built and equipped ready 
for business, it will have cost the city more than fifteen 
millions of dollars." 

The minority report was signed by James H. L,aws and 
Robert Mitchell. It dwelt upon the advantages to accrue 
to the commercial and manufacturing interests of the city, 
and expressed the expectation that there would be large do- 



20 77ie Beginnings of the Southern Railway. 

nations along the line of the road, and the belief that " the 
road can be leased for a rental sufficient to pay the interest 
upon its cost, and to provide a sinking fund for the redemp- 
tion of the bonds necessary for its construction." 

While the Cook resolutions were pending in the Cham- 
ber of Commerce, public interest and discussion grew in 
feeling. The newspapers talked freely, and published many 
communications on both sides of the question. A few quo- 
tations will serve to show the state of public opinion. 

The E?iquirer of January 6, 1872, said: 

In the Southern Railroad meeting at the Board of Trade rooms, 
Col. Iy. A. Harris expressed the opinion that a large majority of the 
people are now opposed to further proceedings under the Ferguson 
Bill. We presume nobody who mixes much with the public will deny 
this assertion. As times have changed, so have the people. Whether 
the sentiments of the city in the determination of the question will 
have the slightest influence remains to be seen. 

The same paper said the next day: 

The Gazette speaks of the Ferguson Bill being almost unani- 
mously ratified by the City of Cincinnati. It received about 15,400 
votes to 400 against it. But then we have 36,000 voters in this city. 
Were a vote now to be had, we suppose it might receive 6,000 out of 
the 36,000. 

The following day it discussed the situation at length, 
saying, among other things: 

The Chamber of Commerce is to vote to-day upon the Cook res- 
olutions. These resolutions declare the inexpediency of proceeding in 
the construction of the Southern Railroad under the present scheme. 
In this connection we desire to impress a point or two. It is not 
criminal nor an evidence of lunacy to hold to the belief that a South- 
ern Railroad can be secured at ten times less cost by paying a down- 
right bonus to a responsible corporation. Neither is it an offense 
against society to advance the doctrine that the city's interests will be 
best subserved by the passage of another act, similar to Ferguson's, 
with proper and much needed restrictions, providing for the construc- 
tion of a portion of the line, and the leasing of it to a company upon 
the condition that they build the remainder. It is no evidence of in- 
sanity to believe that under the Ferguson Bill the Trustees of the 
Southern Railroad are unrestricted in the matter of expenditure. In 
addition to this, no man need fear that he will be driven out of society 
because he advances the idea that the recent decision of the Supreme 



The Cost of the Road, etc. 2 1 

Court does not sustain the validity of a bonus. It certainly does, and 
there need be no fear that the killing of the Ferguson Bill will forever 
deprive us of our badly-needed Southern road. 

The Commercial was expressing similar views. In its 
issue of January 7, 1872, it said: 

Two and a half years ago, there was not, so far as we could see, 
any other plan that promised success save that of the Ferguson Bill. 
We have been disappointed with the slow progress made under the 
Ferguson plan. Time has passed until conditions have changed. The 
theory that the city would make money by the building of the road is 
absurd. The calculations that it would only cost ten millions are un- 
warranted by railroad experience. We would vote for the repeal of 
the Ferguson Bill because we believe money would be saved and no 
time lost by its repeal, and it is possible that though the Chamber of 
Commerce may flinch from a vote for repeal, as the case stands, the 
mass of people of Cincinnati might not do so. 

The Gazette was the only one of the English morning 
papers that stood by the Trustees, and opposed the Cook 
resolutions. In its issue of January 6, 1872, two days before 
the vote in the Chamber of Commerce, it said, in the course 
of a strong article: 

People may rest assured that if the Southern Railroad is to cost 
over twelve millions of dollars, the Trustees will never build it. 

The Chamber of Commerce voted on January 8, 1872, 
on the question, " Shall the Ferguson Bill be repealed?" 
and the vote resulted, yeas 147; nays 361. But the fight 
went on, transferred, however, from the Chamber of Com- 
merce to the City Council and the General Assembly. 

The bonus idea, as set forth by Mr. S. H. Goodin in 
1869, and subsequently urged by Judge Dickson in 1869, in 
opposition to the Ferguson plan, had been revived in the 
latter part of 1870, by the presentation to the City Council 
of a memorial from Judge Dickson, enclosing a copy of his 
original bill, and suggesting that if the city would act under 
that, and obtain the legislative sanction, it would accomplish 
the desired object. A Committee of Council was named, 
and went into correspondence with a number of persons, 
among whom was Mr. David Sinton, who assured the Com- 



22 The Beginnings of the Southern Railway. 

mittee that for a bonus of four million dollars he would 
form a company and give ample bonds for the construction 
of the road. The Council Committee made application to 
the General Assembly for a charter, but owing to the late 
period at which the matter was brought up, the permission 
was not obtained. 

The General Assembly of Ohio met a short time after 
the vote in the Chamber of Commerce, and Mr. John T. 
Fallis, a member of the Hamilton County delegation, 
presently introduced a bill repealing the Ferguson Act and 
authorizing Cincinnati to pay a bonus of three million dol- 
lars for the construction of the road. 

Meantime the Bissell resolution was before the City 
Council, covering practically the same ground as that of 
Mr. Cook in the Chamber of Commerce; and the Trustees 
were pressing for the third time on the Kentucky Legisla- 
ture the enabling act which they had vainly attempted to 
obtain in 1870 and again in 1871. The Kentncky Senate 
passed the act on January 27, 1872, but with restrictions 
which were exceedingly unsatisfactory to the friends of the 
bill. The House passed the bill a few days later, and on 
February 13, 1872, it was signed by Governor Ieslie and 
became a law. 

Thus, at one and the same time, the Trustees had on 
their hands, a fight against the Fallis Bill in the General 
Assembly, against the Bissell resolution in the City Council 
and against the prevalent dissatisfaction with the onerous 
terms imposed by the Kentucky legislature. A few ex- 
pressions, from many, will show the state of public feeling. 

Thus, on February 2, 1872, the City Council adopted, 
by a resolution of 29 to 8, a resolution requesting the 
Trustees to "reject the charter under the unjust and illegal 
exactions, limitations and burdens put upon Cincinnati by 
the Kentucky Legislature. " In the course of the debate 
Mr. Fitzgerald said: 

The Trustees are making hot haste to issue bonds; if they do it 



The Cost of the Road, etc. 23 

hell is not hot enough and eternity long enough for the punishment 
the citizens of Cincinnati will judge them as deserving. 

Mr. Woolley said: 
The Ferguson Bill as passed by the Legislature of Ohio is the 
most outrageous and corrupt piece of legislation that has ever dis- 
graced the annals of a representative country. 

Commenting on the action of Council the Commercial 
said : 

Public sentiment has changed. The vote in the City Council is a 
fair index of the feeling to-day among the business men and tax- 
pa3 r ers. Some of the reasons for this are that great rival railroad cor- 
porations centering here cannot stop without new connections with 
the south; that for a bonus of one-tenth the proposed sum private 
parties are ready to build the road; that the ten millions will not 
build the road, and the amount spent will not be justified by any re- 
sults; that it will be a road running through and necessarily controlled 
by another state; that there is nothing to prevent the tapping of it 
after it is built; that the road cannot possibly be controlled in the in- 
terest of Cincinnati; that the whole theory is founded on a false idea 
of government. Why should not the Ohio Legislature repeal a law 
which the citizens of Cincinnati are opposed to ? 

The Gazette said : 

For our part, we are utterly opposed to forcing upon the people of 
Kentucky an expenditure of ten millions of Cincinnati money to build 
a railroad in that state under conditions which treat it as a hostile 
project. 

The Gazette carefully estimated the cost of the road as 
to be eight and a half millions and published the amount in 
black-faced type. It strongly opposed "The Bill of Fal- 
lacies," "to create a railroad syndicate with a fund of three 
millions to give away and to repeal the Southern Railroad 
Charter." It wanted to know "what evidence is there 
that Mr. Fallis represents any Cincinnati constituency 
or interest, or any public opinion ? " At the same time 
Judge Dickson was printing in the Gazette, and other papers 
as well, column after column in support of the Fallis 
Bill. 

The Enquirer was saying that "a resolution in the 
nature of the Fallis Bill, and positively to limit the liability 



24 The Beginnings of the Southern Railway. 

of Cincinnati to a given sum, is excellent and should be 
carried out. ' ' Mr. Miles Greenwood was testifying before 
a Council Committee, "I think the cost will not go beyond 
ten millions," and Mr. Joseph C. Butler, before the same 
Committee, was estimating the cost at twenty millions, 
with five or six more to equip it, and declaring that the 
road, if built, "would benefit Kentucky and help Coving- 
ton amazingly, and place a burden upon our shoulders that 
it would be very difficult to get rid of." Mr. N. G. Nettle- 
ton thought ' 'the road would probably not be worth what 
it cost, and that the amount of taxation would decrease 
the price of property so as to prevent an increase in the 
population of the city." Some people were in favor of 
having Council direct the Mayor to submit to popular vote 
the question of preference between the bonus plan and that 
of the Ferguson Bill. Men were quoting with approval a 
sentence from the opinion of the Supreme Court: "Had 
we jurisdiction to pass upon the wisdom of the Ferguson Act 
we should probably have no hesitation in declaring it an 
abuse of the taxing power." And the Commercial was 
saying: 

Trustees and able editors may deceive themselves into the belief 
that the road can be built throughout for ten million dollars, and that 
the earnings of the road will pay the interest on the investment, but 
they will not deceive the people to that extent, for too many of them 
have had in that branch of business the education of experience. 

Wherever the discussion was carried on, whether in the 
Conncil Chamber, the Chamber of Commerce, the Board of 
Trade, or the newspapers, the evideuce was clear that Cin- 
cinnati had begun to have some realizing sense of the tre- 
mendous work on which more than two and a half years be- 
fore it had all but unanimously decided to embark. It will 
be noticed from the extracts which have been given that the 
discussion turned, at this time, almost solely on the ques- 
tion, What would the road cost ? And would it pay ? Only 
casual reference was made to the wisdom of this exercise of 
the taxing power. 



The Cost of the Road, etc. 25 

The upshot of the discussion was the passage by 
Council of a resolution, by a vote of 31 to 7, calling upon the 
General Assembly to pass a bill limiting the expenditure of 
the Trustees to ten millions, and fixing the compensation of 
the Trustees. The General Assembly took no action. It 
consigned to the limbo of unpassed bills the bill proposed 
by Mr. Fallis. March 25, 1872, two of the obnoxious ob- 
jections of the Kentucky Act were repealed. A year later 
the last was repealed. 

Practically the Trustees had won all three of their fights, 



26 The Begimiings of the Southern Railway. 

IV, 
GETTING READY TO WORK. 

After the discussion of 187 1-2, public interes t drifted 
away to other important things — the Presidential campaign, 
especially, and the columns of the newspapers and the minds 
of men were chiefly concerned with, at first, whether Charles 
Francis Adams or Horace Greeley was to receive the nomi- 
nation at the hands of the Liberal Republicans; and later, 
whether Grant or Greeley should, and would, be elected 
President. 

It was while the public attention was thus occupied, 
that the Trustees offered for sale the first lot of Cincinnati 
Southern Railroad bonds. They bore seven per cent inter- 
est and were dated July 1, 1872. The issue amounted to 
only $150,000. Proposals were asked for through circulars, 
mailed to 101 bankers, capitalists and investors in this city, 
and other cities in the country. Only three bids were re- 
ceived — all from this city. The bonds were awarded to the 
First National Bank, at 102.55 an d accrued interest — and 
this was the highest price the city obtained for any of the 
Southern Railroad issues. 

In the fall of 1872, Mr. Hooper, one of the Trustees, 
went to Europe, and was authorized by resolution of the 
the Board of Trustees "to make known to foreign capitalists 
the authority and wants of the Board, and to ascertain what 
kind of a bond could be sold abroad to advantage. ' ' He ac- 
complished, however, nothing, except to ascertain that the 
restriction on the price of the bonds to par — it was a restric- 
tion imposed by amendment in the General Assembly to the 
original bill — made sales difficult. In his testimony before 
the Investigating Commission given six years later, Mr. 
Hooper said: 

On presenting the subject to the Messrs. Barings, for it was to 
them I went first, they asked why I brought a seven per cent bond; 
that it was prima facie against the credit of the city to offer such a 



Getting Ready to Work. 27 

bond ; that a five per cent or six per cent bond, offered at a discount, 
could be sold much more readily than a seven per cent bond offered at 
par. They gave me reasons why a bond could not be easily nego- 
tiated at par at any rate of interest. The buyers always looked for a 
little margin. I answered that the law required that the bond should 
be sold at not less than par. They said that was an unfortunate posi- 
tion, and it would be an impediment to the negotiations, and advised 
me to go back and get the law changed so that the bonds might be 
offered on business principles. ... I believe I could have nego- 
tiated a five per cent bond at eight} T -five, which would have netted the 
the city very near as much as the Trustees obtained for the seven and 
three-tenths bonds, and would have saved the city, during the life of 
the bonds, many millions in interest. 

About the time Mr. Hooper went on his first trip to 
Europe, Mr. Thomas D. L,ovett was appointed Consulting 
Engineer. On December 17, 1872, the Act of Congress was 
passed authorizing the construction of the Southern Rail- 
road bridge. In the early part of the following year, i. e. , 
on the 4th of February, 1873, th e Kentucky Legislature 
repealed the last of the objectionable provisions of the Act 
of February 13, 1872. The next day, Mr. Ferguson drew 
what is known as the Wright Bill, its chief purpose being 
to enable the Trustees to make a contract to complete and 
lease the entire line, and it was shortly afterward sent to 
the General Assembly. There was some opposition to this 
bill, based on the ground that it vested power in the Board 
of Trustees to the exclusion of Council; but the business 
community was clearly in favor of its passage, and on April 
18, 1873, it became a law. 

With all the legislation now completed — ' ' not alto- 
gether," Mr. Ferguson said, "as I wished, but better than 
I could have expected ' ' — the Trustees were ready to go for- 
ward with the work of construction. But, as preliminary 
to this, they had to secure a market for their bonds, and on 
May 6th — Mr. Hooper having returned from Europe with 
a report of no success — a committee of the Board of Trus- 
tees was appointed to prepare a circular and pamphlet show- 
ing the powers of the Board, and such other information as 
would be useful in negotiating bond sales. 



28 TTie Beginnings of the Southern Railway. 

Negotiations were at once begun with Winslow, L,anier 
& Co., of New York, and they proceeded during July, 
August and the early part of September. On September 
13th four of the Trustees met in New York, heard proposi- 
tions from a syndicate, rejected them, and returned to Cin- 
cinnati. Five days later — on September 18, 1873 — Jay 
Cooke & Co. failed, and a business depression followed 
which has become historical. The Investigating Commis- 
sion report, page 23: 

The terms submitted by the New York syndicate, through Mr. 
J. W. Ellis, in three different propositions, in September, 1873, would, 
as the financial history of the times has resulted, have been more fa- 
vorable than the American Exchange Bank contract, but the uncertain 
relations then existing between gold and currency warranted their 
rejection. 

At the same time the bond negotiations were in prog- 
ress work had been prosecuted on the engineering side. In 
March, 1873, a complete copy of the numerous surveys 
made under the supervision of Mr. Gunn was presented to 
the Board, and published in the daily papers. It made a 
pamphlet of sixty-five pages. "It embraces," says Mr. 
Gunn, "a general description of the country from Cincin- 
nati to Chattanooga, and detailed descriptions of all the 
routes surveyed except a few abandoned lines." "In addi- 
tion to 1500 miles of survey, made by order of the Trustees, 
we have had the use of nine other surveys." In May, 
1873, Mr. Iyovett made a comparison of the various routes, 
but without an estimated cost for any one. On August 30, 
1873, three days before the four members of the Board left 
for New York to negotiate the bond sale, Mr. Gunn made a 
written estimate to the Board: 

Eastern Route 350 miles $11,250,000 

Military Route 338 miles 12,000,006 

And he explained that by the use of less ballast and a 
lighter rail the cost could be reduced to $10,750,000 for the 
Bastern Route, and $11,500,000 for the Military Route. 

Thus matters stood, when on September 18th the fail- 



Getti?ig Ready to Work. 29 

ure occurred which, as Mr. Hollander says, "made practi- 
cally impossible the completion and disposition of so im- 
mense a work by a single contract, which ruined a large 
number of railroad capitalists, and made necessary the 
abandonment of the ' completing and leasing ' project, and 
a return to the original plan of detailed construction as the 
onl) r possible method of procedure. ' ' 

Late in the fall public interest again turned to the 
subject. 



30 The Beginnings of the Southern Railway. 

V. 
LETTING THE FIRST CONTRACT. 

There were symptoms of uneasiness in certain circles in 
Cincinnati after the Jay Cooke failure. It was realized that 
the bond market had received a heavy blow, and that the 
negotiations of Southern Railroad bonds would be attended 
with difficulty. Besides this, it was not known how much 
had already been spent, and vague reports were in circula- 
tion that the amount was very large. 

On October 22, 1873, the E?iquirer printed a long edi- 
torial suggesting that further legislation was needed, and 
setting forth fifteen points as to which the opinion of the 
City Solicitor was asked. The next day it suggested in- 
quiry as to the amount of bonds already issued, saying, 
1 ' We want light and must have it ; ten millions of money is 
a large amount to be put under the control of two men to 
distribute in the dark. ' ' 

Two days later, October 25, 1873, the same paper said: 

We learn that the apparent do-nothing policy of the Trustees is 
only apparent. They have been busy all summer in making local 
surveys, procuring right of way, depot grounds, land grants, and 
making surveys, observations and plans and plats in relation to bridges 
over the Ohio river, and inuegotiating for the right to cross the streets 
of Covington, Newport and Cincinnati in which the connection track 
is laid. 

Mr. Hooper left for Europe on his second trip in the 
effort to negotiate the sale of the bonds, about November 
10th. On the 2 2d, the Commercial said : 

If the impending calamity upon the city involved in attempting 
to build the Southern Railroad in these times is averted, it will not be 
by the action of these Trustees. Let the law be repealed. 

On the 6th of December, the Gazette said : 

There is every reason to believe that the preliminary work is 
nearly done. There is no need of anybody losing confidence or be- 
coming distrustful. Those that know most about the project and its 



Letting the First Contract. 31 

present condition are those that are most hopeful. Our business men 
are heartily in sympathy with the Trustees. The city has undertaken 
the job and will not back out. 

In the same issue was published an account of a public 
meeting held the evening before to consider the question of 
the bridge across the Ohio, the subject of discussion being 
whether the Newport bridge should be used or a new bridge 
built. At that meeting Mr. Gunn was reported as saying : 
" He was free to state that the estimates of the cost of the 
road would not vary much from ten millions of dollars." 

At the same meeting, Mr. Ferguson was quoted as hav- 
ing said, in way of comment on some remarks about cost 
which had been made, ' ' There never was any estimate of 
ten millions cost made, gentlemen. ' ' 

On December 10th, the Trustees opened bids — there 
were twenty-seven of them — for the first work on the road. 
They were for the construction of King's Mountain Tunnel. 
On the 1 2th of the same month, the award was made to 
Bibb and Tabler, the cost of the work, according to the en- 
gineer's estimate, being $162,893. It may be remarked 
here, that the work was transferred to Tabler and Henley ; 
that they failed ; that a part of the work was afterwards 
done by the Trustees themselves ; that the contract was 
finally completed by Boyle and Roach, and that the total 
cost was $418,993.52, being $256,099.62 more than the 
original estimate, or more than twice as much. ' ' This 
excess is largely attributable," the Investigating Commis- 
sion said, ' ' to the unknown and difficult character of exca- 
vation in King's Mountain Tunnel." But it was part of 
the cost which the taxpayers of Cincinnati had voted to 
incur, and which they became responsible for. 

The day after the award was made, the Gazette said : 

News which we publish this morning will be welcome news to 
our citizens. There is no time now to be lost, either by the Trustees 
or by the people of Kentucky. 

Several days later the Commercial, realizing the mean- 
ing of this action, said, in its issue of December 2: 



32 The Beginnings of the Southern Railway. 

The people of Cincinnati should comprehend one aspect of the 
situation thoroughly. We are going right into the work of construct- 
ing the Southern Railroad. Our bonds will be placed as soon as prac- 
ticable. We may count already the ten millions we appropriated as 
a part of our city debt. It is our hope that this railroad will prove di- 
rectly remunerative, but we shall know more about that ten years 
hence. 

Now, the point that we would make is. that while we are putting 
our capital into the Southern Railroad with the hope of increasing the 
business of the city, we must^>z^ a stop to the utterly unproductive en- 
terprises about the city. 

The same day the Gazette said: 

From the surveys and estimates which are very complete, it is 
the opinion of the Trustees that the means at their disposal — that is to 
say, ten millions of dollars — will be sufficient to build the road from 
the Ohio river to Chattanooga. The contract for King's Monntain 
Tunnel, already made, falls far below the estimate. The citizens of 
Cincinnati may rest assured that this great trust is in excellent 
hands; that the road will be pushed rapidly forward to completion, 
and that no portion of this money will be wasted or stolen. 

December 23d, the papers published a long report signed 
by C. A. G. Adae, C. F. Wilstach, J. J. Slocutn and I,. C. 
Weir, made to the Board of Trade, and giving a statement 
of their conclusions drawn from a. conference with the Trus- 
tees on the bridge and other questions. They said: 

Your Committee are given to understand by the Trustees, that 
the contract made for King's Mountain Tunnel justifies them in the 
utmost confidence in the estimates of their engineers for the entire cost 
of the road. 

The next day there was published the report of the 
Chamber of Commerce Committee that had taken part in 
the same conference. The report was signed by C. W. 
Rowland, B. Kggleston, C. W. Woolley, William Clifford 
Neff and Richard Smith. They said: 

The Trustees deem the fund now at their disposal nearly suffi- 
cient, with the donations secured or in prospect, to construct the en- 
tire line from Cincinnati to Chattanooga, exclusive of the bridge across 
the Ohio and the approaches thereto. The amount already expended 
is a trifle in excess of $200,000. 

In the October election of 1873, Hon. Vachel Worth- 



Letting the First Contract. 33 

ington had been elected to the Ohio Senate. On December 
28, the E?iquircr published this correspondence: 

Cincinnati, December 19, 1873. 
Hon. Vachei, WorThtngton: 

Dear Sir — I return to you the articles cut from the Enquirer. I 
am obliged to you for the use of them. I hope there will be oppor- 
tunity for you ere long to give full expression, for the benefit of the 
public of the views which you here indicate. [Note — Reference is 
probably made here especially to the Enquirer editorial of October 
22d.] I feel that there is impending over the city a great calamity. 
We cannot prosper under the taxation that will be piled upon us if we 
go on with this road. Our taxes are now two and a half per cent — 
twenty millions will increase this more than one-third. Taxes at three 
or four per cent will drive business across the river. But I fear the 
matter will go on. There are so many people interested in spend- 
ing so large a sum of money that they will overreach those having only 
a public interest in the matter. A friend of Mr. Ferguson says that 
the spending of eight or ten millions about here would ' 'make things 
hop. " So it will for the hour. The resolutions of Mr. Laws are in- 
tended to get rid of the city building the road, and as the less evil I 
prefer them. [Note — Mr. Laws' resolutions had been introduced in 
the Chamber of Commerce and asked the Constitutional Convention, 
then in session in Cincinnati, to provide in the new constitution, for 
aid by cities to railroads; they were laid on the table by the Chamber.] 
Entering the Legislature by a majority beyond and above all 
parties, wholly uninstructed and with a weight of character seldom 
equaled, you have an opportunity to do much for the county you rep- 
resent. If you prefer doing the things that are useful to the things 
that are agreeable, you can do nothing of greater service to this city 
than the repeal of the Ferguson Law. Yours truly, 

(Signed) W. M. DiCKSON. 

Cincinnati, December 19, 1873. 
W. M. Dickson, Esq.: 

I have yours of this date, and note its contents. I think you 
greatly overrate my powers as legislator. It is true I go to Columbus 
to work, not to play, but what can I do without instructions from my 
constituents ? You constitution declares the people have the right to 
instruct their representatives and to petition the General Assembly for 
the redress of grievances. I not only believe in the doctrine, but am 
sworn to support it. Yon have upon your statute books many laws 
that I disapprove and believe should be modified, but why should I 



34 The Beginnings of the Southern Railway. 

disturb them without instructions ? They have been enacted, and ap- 
parently approved by the people and no legislature, that mere servant 
of the people, should meddle with them, without their wish. I think 
your Southern Railroad law, your municipal laws, }'Our school laws, 
your Public Library laws, in many respects unwise, and in some respects 
unconstitutional, but what can I do ? If the court sustains these laws, 
and the people want them, we must all submit. Governments are 
organized by and for men, within a given territory, not for taxation 
or schemes of trade and enterprise, but for protection, and that which 
a government cannot protect, it cannot levy taxes to build up and 
support. Protection and taxation are concurrent and inseparable. 

As to cities, they, too, are organizations of men within a given 
territory, by the law power within its limits. In my opinion, after 
much reflection, the General Assembly have no power to authorize 
any city in the State of Ohio to exercise any functions outside of that 
state and levy taxes for their support. It is an abuse of tax power. 
It has not been given by the people to the General Assembly, and, of 
course, cannot be given by it to any city. I do not agree with the 
Supreme Court, in the 21st Ohio State Reports, as to its jurisdiction 
over the law, nor do I consider their decisions on any constitutional 
question. I must as a law power be guided by the dictates of my own 
judgment and not theirs, and if we differ we must appeal to our 
masters to settle the questions. Yours, truly, 

Vachei, WorThington. 

And thus closed the year 1873. Four years and a 
half had elapsed since the city had voted to build the road 
and the bonds had not been placed, nor active work on a 
contract begun. Mr. Hooper was abroad negotiating with 
Knglish financiers and at home the feeling of distrust and 
uncertainty was undoubtedly growing. But, on the other 
side, the Trustees, feeling undoubtedly that the majority of 
the voters was behind them and that they had a great and 
responsible trust to fulfill, were at work. The first contract 
had been let. The hardest piece of work on the whole line 
had been selected, distant from Cincinnati about 136 miles. 
The city was certainly in for it, whatever may have been 
the thought of opponents or careless observers. 



Bonds Negotiated and Work Prosecuted. 35 



VI. 

BONDS NEGOTIATED AND WORK PROSECUTED. 

Mr. Hooper was energetically applying himself in 
January, 1874, and for several months thereafter, to an 
effort to place Southern Railroad bonds in Europe. His 
suggestion that the law should be changed so that a five 
per cent bond could be negotiated was not adopted by the 
Trustees, because, as he said afterwards, in his testimony 
before the Investigating Commission, "they were afraid the 
Legislature might repeal the law. ' ' 

On January 24, 1874, Mr. Hooper wrote the Board at 
some length, detailing the manner in which his efforts to 
place the loan had been thwarted by anonymous correspond- 
ence sent to Baring Brothers & Co., in which was inclosed 
the Dickson-Worthington correspondence, with the result 
that the Barings abandoned all consideration of the loan. 

In his testimony Mr. Hooper said about his experiences' 
at this time: 

As one of the episodes in this matter — I was on the point of ne- 
gotiating with one of the large joint stock banks in London. The 
matter had been all arranged and required only the assent of the 
Board of Directors. Among them was a canny Scotchman who in- 
quired by what authority these bonds were being issued, as he thought 
it most extraordinary that a city should undertake to build a road out 
of its own domain and beyond its territory. He was answered that 
it was authorized by the Legislature of the State of Ohio, and the 
constitutionality had been adjudicated upon by the Supreme Court of 
Ohio. He replied that he had no confidence in judicial decisions, for 
if it became expedient those decisions would be reversed. Other 
gentlemen thought it was a monstrous suggestion that the decision 
of the Supreme Court could be reversed. He answered that it had 
already been done in a case in the Supreme Court of the United 
States, which decided that greenbacks were not legal tenders, and 
that afterwards new judges were purposely appointed to reverse that 
decision. The Board then concluded that they would decline the 
loan. 

I was confronted by other difficulties. One of the parties with 
whom I was negotiating at that time was receiviug slips from Cincin- 



36 The Beginnings of the Southern Railmay. 

nati newspapers which contained attacks upon the whole enterprise. 
I replied that they were attacks of some sore-headed individual. They 
said what if he should send such a communication to the London 
Times, after the bonds had been negotiated, where would the bond- 
holders be then ? 

February and March, 1874, went by and it was be- 
coming increasingly evident to the Trustees that efforts 
should be made at home to secure a market for the bonds, 
in anticipation of the probable inability of Mr. Hooper to 
place them abroad. Accordingly, on March 31st, through 
Mr. W. W. Scarborough, arrangement was made with the 
American Exchange National Bank of New York that ' ' it 
would put out the 7.30s currency bonds, for sale in the 
markets of New York and other Eastern cities, — the price 
to be not less than par, and the bank to charge not over 
one per. cent commission on sales, — the amount of the bonds 
to be from two to four millions of dollars, the whole to be 
sold by them if demand should be found in the Eastern 
cities." The first million of bonds found a market, under 
this arrangement, on May 20, 1874. 

July 7, 1874, Mr. Hooper was advised that the Board 
of Trustees had sold sufficient bonds at home, and he was 
directed, ' ' unless his obligations prevented, to announce 
the withdrawal of the proposed sterling negotiations." In 
October of that year, Kuhn, I/>eb & Co. made an offer 
through the American Exchange Bank for the unsold bal- 
ance of the ten million loan, and after considerable negotia- 
tion, and some lapse of time, the last of the first loan was 
finally taken in May, 1875. Mr. Coe, President of the 
American Exchange Bank, wrote, under date of May 14, 

1875: 

Thus closes a negotiation which I regard as one of the most suc- 
cessful I have ever been engaged on, when all the difficulties encoun- 
tered are considered. 

As to one detail of these bond negotiations, the Inves- 
tigating Commission said, in the report of January, 1879 : 

The change of the rate of interest on the 18th of March, 1874, 
from 7 to 7.30 per centum seems to have been adopted without discus- 



Bo?ids Negotiated a?id Work Prosec7ited. 37 

sion, and the important consequences resulting therefrom do not ap- 
pear to have been appreciated by the Board. The first £700,000 bonds 
of the ^10,000,000 issue were put out at 7 per cent, interest, and of 
these, the first sale of 5150,000 was made at a premium of 2.55 and in- 
terest. It is not difficult to believe that, if the 7 per cent, interest had 
been firmly adhered to, the whole ten millions could have been dis- 
posed of at net par, and the proceeds obtained at such times and in 
such sums as would have met the demand of the enterprise. The 
large additional burden thus put upon the city, could scarcely have 
attracted the attention of the Trustees at the time this change was 
made. The simple addition of three-tenths of one per cent, to the in- 
terest on the 59,300,000 thirty-year bonds negotiated through the 
American Exchange Bank and Kuhn, Loeb & Co., compounded at 
the rate of six per cent., amounts to the startling sum of 52,205,764, or 
an average annual addition of $75,525 to the taxes of the city ! This 
reminiscence is well calculated to suggest that the mill of interest and 
the mill of taxes, like the traditional mills of the gods, grind slow, but 
grind exceedingly fine. 

Though it was a long time before all the details of this 
bond negotiation became known to the public, the effect was 
almost at once apparent in the more vigorous prosecution of 
the work of construction. With all the money that was 
needed, and with contractors pressing for work in the de- 
pressed times which had succeeded the failure of Jay Cooke 
& Co. , there was no difficulty in letting contracts. Work 
hummed. 

But even before a bond • had been sold, a very impor- 
tant decision had been arrived at by the Trustees. Under 
the Kentucky charter the location of the road in Kentucky 
had to be fixed by the 13th or 14th of February, 1874. ^ ne 
two questions of importance involved were whether the 
Newport bridge should be used or a new bridge built, and 
whether the Kentucky Central should be bought. Over 
these questions arose a discussion which was marked by 
considerable feeling and even bitterness. It is not neces- 
sary to go into the details of that discussion. It is only one 
of the episodes of this Southern Railroad history, and 
though it created excitement and hard feeling at the time, 
more important issues were coming. Suffice it to say that 



38 The Beginnings of the Southern Railway. 

the Trustees decided against buying the Kentucky Central, 
and also decided, on the 12th of February, 1874, to build a 
new bridge, for reasons that were elaborately set forth in a 
statement by the Trustees which was published in the daily 
newspapers of February 13th. 

April 7, 1874, the Trustees purchased of David Sinton 
and others, for $300,000 in seven per cent, currency bonds, 
the Cincinnati, L,exington & East Tennessee Railroad. Ap- 
parently they had determined not only that a market would 
be, but must be, found for the then unplaced bonds. But 
after the negotiations which began in October, 1874, the Trus- 
tees had, for several months, all the money they needed. 

Thus the year 1874 ended, and 1875 began. 

Opposition cropped out every now and then. The 
Times was openly opposed to the road, and had been since 
the passage of the Wright Bill. On the 7th of January, 
1875, "X" wrote a communication to the Enquirer in 
which he said : 

I firmly believe that a vote here to-morrow on a question of con- 
tinuing or dismissing the present Trustees, would result in a majority 
against them of 30,000. Let them try it, if they doubt my correct- 
ness ; or, if they really desire to respond to the wishes of the people, 
apply to the Legislature for an act authorizing the city to issue five 
millions more of bonds when sanctioned by the popular vote. If they 
succeed then in carrying the majority, all future opposition will be 
simply captiousness. 

A few days later, the Enquirer remarked : 
The Commercial's warfare against the Southern road is properly 
appreciated by the business men of Cincinnati. 

The bids for building the Southern Railroad bridge 
were opened January 18, 1875, and the Gazette said, "They 
will result in a saving of over $600,000." Two days later, 
the same paper said : 

The Trustees are now sanguine that the ten millions will come 
near building the road to Cincinnati, including the bridge. 

Mr. Hooper resigned as Trustee on the 27th of Janu- 
ary, 1875, and the Gazette remarked: 



Bonds Negotiated and Work Prosecuted. 39 

The people are satisfied that the trust has been honestly man- 
aged, that there are no jobs, and that every cent of the money thus 
far expended has been satisfactorily accounted for. This is not the way 
railroads are usually built, but it is the right way. The wisdom of the 
court, therefore, in selecting solid business men instead of the profes- 
sional railroad builders has been fully demonstrated, and we believe it 
is the general sentiment of the public that no change be made in this 
respect. 

The same day, the Commercial, in reporting the resig- 
nation of Mr. Hooper, quoted him in the local columns: 

He is against the building of another railroad between Cincin- 
nati and Lexington. He said the ten millions would be used up with 
only a party built road to show for it, and to put the line in running 
order Cincinnati would have to contribute five millions more. He 
does not feel sanguine of the success of the Southern road. He does 
not believe it will ever pay the interest on the money it will cost. 

On January 31, 1875, the Commercial, reverting to the 
subject, said: 

The ten millions are to be spent without adding a square mile to 
the Southern territory tributary to Cincinnati markets, and the call is 
then to be made for the additional millions backed by the overwhelm- 
ing argument that if we do not go farther into our pockets we have 
utterly lost all that we have paid. 

Quite a sharp exchange of views took place as to Mr. 
Hooper's successor. As has been seen, the course of the 
court in not appointing railroad men had been generally ap- 
proved, and the conrt was urged by the Gazette to follow 
the same policy in the appointment of Mr. Hooper's suc- 
cessor. On the other hand, the Commercial expressed in 
its issue of February 3, this view: 

We think the Trustees have made a disastrous mistake in enlarg- 
ing the enterprise beyond what was demanded and in excess of the 
appropriated means of the city. But we must not discuss that now — ■ 
the policy is fixed, and the contracts made. There is one thing want- 
ing and that is a practical railroad man in the Board. 

While this discussion was in progress, bids were 
opened for 25,000 tons of steel rails. The Gazette said on 
February 2: 

Iron rails were $85 per ton when the Trustees began the survey 



4-0 The Beginnings of the Southern Railway. 

of the routes. Steel rails can now be had for less than iron rails then. 
We are having an example of the economy with which a road can be 
built for cash and by square contracting. 

The Enquirer said on February 4: 

It is increasingly evident that the Trustees will build the South- 
ern Railroad cheaply. They have just received advices that the sale 
of bonds has produced a million dollars in excess of present demands. 
In the bridge contract and in this contract for rails, the sum total will 
fall about $ 1, 500, 000 below the expenditures in estimating the cost of 
the road. 

The controversy over the successorship of Mr. Hooper, 
and the difference in views as to the cost of the road led the 
Gazette to say in the issue of February 8: 

The Commercial has been opposed to the Southern Railroad from 
the start. It has done everything it could to obstruct the work and 
prevent its completion. 

To this the Commercial replied two days later in an 
article over a column in depth. A brief extract will suffice 
to show its temper and view: 

Unfortunately it is not true that the Commercial has been~op- 
posed to the Southern Railroad from the start. We helped start the 
road — and we made a mistake. It is the enlargment of the enterprise 
beyond all expectation when it was started that we object to. Does 
the editor of the Gazette assert that the intelligent people of Cincin- 
nati ever would have consented to go into the business of constructing 
a railroad if they had known that the first thing to be done was to 
parallel the Kentucky Central ? 

The court appointed Mr. W. W. Scarborough as Mr. 
Hooper's successor. While discussion was in progress, the 
enterprise of the newspapers gave opportunity for an ex- 
pression of individual opinion. The Enquirer published, 
on February 6, interviews of two or three lines each with 
many prominent citizens. These interviews occupied nearly 
two and a half columns. Only three were opposed to 
the enterprise — Mr. Theodore Cook, Mr. Thomas Emery 
and Mr. M. Zeigler. Mr. Emery said: "I am not in favor 
of the road. The management is as good as it can be in 
this respect. I object to the city building the road." 



Bonds Negotiated and Work Prosecuted. 41 

The Commercial printed a column interview with Mr. 
David Sinton, also on February 6; Mr. Sinton said: 

I am perfectly satisfied with what the Trustees have done, and 
what they propose to do. Ten millions will not quite do it. It will 
take about twelve. But people can be found to pay the balance, lease 
the road, pay the interest on the bonds the city has issued, and get up 
a sinking fund. 

In General Term of May, that year, the Superior Court 
appointed E. D. Mansfield, R. H. Stone and James Pullan, 
Master Commissioners, to examine the affairs of the Trus- 
tees and report as to their compensation. 



42 The Beginnings of the Southern Railway. 

VII. 
WHAT MR. SCARBOROUGH FOUND. 

Mr. W. W. Scarborough was appointed successor of 
Mr. William Hooper as Southern Railroad Trustee on Feb- 
ruary 1 6, 1875. As he testified afterwards, his first work 
was to acquaint himself with the finances of the road, which 
he found to be "in good condition." The bond contract 
with Kuhn, L,oeb & Co. was in force, and as the bonds 
were claimed and paid for, the proceeds, over and above 
the amounts that were kept in bank for daily or weekly use, 
were put into government securities. 

An approximate statement was made for Mr. Scar- 
borough of the expenditure already incurred and of the 
liabilities of the Trustees on outstanding contracts. These 
aggregated about $9,500,000. On the 21st of May, 1875, 
he addressed a formal communication to the Trustees re- 
citing the situation, referring to advice he had received 
from his counsel, Judge Hoadly and General Bates, and 
closing with a "protest against further increase of liability 
on the part of the Trustees. ' ' It was more than three years 
before this information became public, and then through 
the testimony of Mr. Scarborough before the Investigating 
Commission. 

The Trustees went on in spite of this protest. Mr. 
Ferguson testified as to it: 

I would like to say in regard to the protest of Mr. Scarborough, 
against an increase of further liability on the part of the Trustees, and 
the opinion on which it was based, of Messrs. Hoadly and Bates, that 
I did not concur in the legal conclusions; and if I had, I viewed my 
trust duty to be such in the state of the work then that we should go 
on, and if there was any risk I was willing to put my personal fortune 
in peril rather than stop the work — and did so if the conclusion of 
Judge Hoadly and General Bates was correct. 

One other point from Mr. Scarborough' s testimony, 
given on November 26, 1878, 1 's worth noting. He said: 



Wliat Mr. Scarborough Fotmd. 43 

On the 13th of May, 1875, after getting the statement of liabilities 
and expenditures I made a detailed estimate myself which showed the 
road would cost between seventeen and eighteen millions of dollars. 

Mr. Scarborough resigned his office as Trustee in 
November, 1875, and Judge Taft was appointed his suc- 
cessor. 



44 The Beginnings of the Southern Railway, 

VIII. 

THK SIX MIUJON ISSUE). 

At the time Mr. Scarborough resigned after his very- 
brief term of service, Mr. L,ovett, the Consulting Engineer, 
was about completing a report on the progress of the work, 
the cost of construction, etc. His letter to the Trustees is 
dated December i, 1875. The report was eighty- five pages 
in length, including a supplementary report of the tests of 
iron columns and struts. His estimate of the cost was put 
in the form of a general resume, and was as follows: 

Grading, Masonry and Bridging. $12,522,627 

Cattle Guards 5, 000 $12,527,627 

Track 3,559,7*7 

Telegraph line 28,742 3,388,469 

$15,916,096 

For a full comprehension of the situation at the time it 
is necessary to note the effect the issue of ten millions of 
bonds was having on the city finances. 

At the close of 1868 the net bonded indebtedness of 
Cincinnati was $4,507,000. In the years following, the 
debt and tax valuations were as follows: 

YEARS. DEBT. VALUATIONS. 

1869 $5,020,000 $130,715,510 

1870 4,883,000 136,107,236 

187I 5,363,000 180,361,932 

1872 6,001,500 175,084,296 

1873 6,143,500 185,645,740 

1874 9,593,500 181,950,074 

1875 17,325,500 184,498,565 

The large increase in valuation from 1870 to 1871 was 
due to the decennial revaluations. 

In his message for 1870; published nearly two years 
after the vote of June, 1869, Mayor Torrence had suggested 
the expediency of building a Southern Railroad in Tennes- 



The Six Million Issue. 45 

see and Kentucky, and arranging with a corporation having 
franchises in Kentucky, and possibly saving in this way a 
quarter or a third of the ten millions. That year the levy 
for interest purposes was 3 mills. By 1874, on a valuation 
that had increased nearly fifty millions of dollars, the inter- 
est levy had gone up to 4.70 mills, with a Sinking Fund 
levy of 25 hundredths of a mill. The levy for 1875 called 
for interest 7.20 mills, and for Sinking Fund 1 mill. The 
heavy burden of taxation was already beginning to press 
hard when the necessity came to the Trustees to ask for an- 
other issue of bonds. 

On Januar} T 6, 1876, the Enqtcirer published this brief 
paragraph in its editorial columns : 

The Southern Railroad Trustees will appear at Columbus in a 
few days with a bill for the consideration of the Legislature, asking 
for authority to raise and expend five million dollars additional on 
this great road. It may be urged by some captious people that before 
another appropriation is made, the people of Cincinnati should be 
called upon to vote on the proposition. This will be met with the ap- 
palling fact that when the people voted in 1869 to build a line of rail- 
way from Cincinnati to Chattanooga, they did not agree to build a 
road that would cost ten millions. There was nothing said on the bal- 
lots, nor in the law authorizing the election, as to the sum to be ex- 
pended. We have started to build the road, and have expended 
$10,000,000. We must finish the job. 

The Commercial quoted the Enquirer paragraph the 
next day, and said, among other things: 

This may be classed as official. The policy of the Trustees 
has resulted in spending ten million dollars without giving us a scrap 
of road of any earthly use. The policy compels us to pay six other 
millions, or throw away all that has been expended. We hold this 
polic3 T has done us great wrong ; and we are not aware that there is 
any remedy for it. Of course the people will vote the six millions. 

The bill was printed in the newspapers on January 
13. As drawn, and subsequently introduced by General 
Bates, then a member of the Senate, it provided that the 
six millions should be issued by the Trustees, and omitted 
the clause in the ten million bill requiring ratification by the 
electors. 



46 The Beginnings of the Southern Railway. 

The Enquirer said: 

There is some difference of opinion as to management, and 
some heavy taxpayers regret that the enterprise was undertaken, but 
having commenced they favor going on with the programme. It is 
thought to be necessary to spend six millions to save the ten millions 
already spent. 

The Commercial said: 

If we don't pony up the six millions, we lose the ten. We have' 
paid our money and we can take our choice. It is our judgment that 
the Trustees have not yet asked for enough. We are not enamored of 
the policy of the Trustees, but they are very much to be preferred to 
the City Council. 

The Gazette, which had been the staunch advocate of 
the Trustees, had nothing to say the day the bill was 
printed, but its silence was quite as significant as remarks 
would have been. 

The Volksblatt and the Times fought the bill from the 
day it was printed. Thus the Times said, on January 15: 

What is needed now is simply to authorize the Trustees to lease 
the road on the terms presented in the second section of their bill, and 
without any outlay beyond the ten million dollars already spent. If 
the elephant cannot be disposed of on these terms, with something of 
the ten millions left, it would be better to give up the whole as a 
bonus to any company that will take it and complete the road than to 
go on until we have run up in this way a debt of twenty, or more, 
probably twenty-five, millions as a permanent investment. 

The Volksblatt, in printing the text of the bill, said: 
I^et us admit frankly and honestly that we Cincinnatians made a 
great blunder, that we allowed ourselves to be carried away with a 
wild tumult of illusions, and closed our ears to the warning voice of 
sound common sense. Following a will-of-the-wisp, we have plunged 
deeper into the wilderness, and are now forced to hear, instead of the 
hoped for advantages and profitable outcome, the melancholy an- 
nouncement that further sacrifices, a further expenditure of money, a 
heavier load of interest, and higher taxes have become necessary. 

The next day the same paper said: 

If we are obliged to present the ten millions already spent to a 
company, that would be better and more profitable than to plunge into 
further uncertainties. We did a stupid act in entering upon this mat- 
ter, and cannot, therefore, expect to get off without loss. We shall 



The Six Million Issue. 47 

be obliged to stand some loss, and the question is how large shall 
this loss be. 

Judge Dickson said in the Commercial of January 16: 
I say that if we can get the road now by subscribing the ten mil- 
lions gone, better that than sixteen. Perhaps the best thing to do is to 
make a second mortgage of the ten millions. 

The Commercial said the same day in its editorial 
columns: 

The Southern Railroad situation is extremely serious for Cincin- 
nati. In flush times, with a public sentiment clamorous for the ex- 
penditure of public money in parks and avenues and ways that must be 
utterly and everlastingly unproductive, with the outcry that the city 
debt was not respectably large, we were beguiled into the Southern 
Railroad enterprise. Some thought if we must spend all the money 
we could borrow, we ought to put some of it into a possibly pro- 
ductive job— and that is the theory that seduced us to consent to 
the project. 

Interviews were published with various citizens. The 
opinion of the majority can be fairly stated in the few words 
of Mr. Adolph Wood: "Accept the issue with a sort of 
dogged acquiescence." Some said: "Better give away the 
ten millions than pile more into it. " Mr. Vachel Worthing- 
ton said: "I can see no grounds to justify the General As- 
sembly in passing the six million bill." "W. M. D." said, 
in a letter: "Confessedly, Mr. Ferguson has beguiled 
and inveigled the city into an ambuscade and now stands 
pistol in hand demanding her instant unconditional sur- 
render. ' ' The Commercial, referring to the Gunn estimate 
of ten millions made in the letter to Mr. Bishop on Decern - 
bor 28, 187 1, remarked: "Gunns shoot as they are aimed." 
On the 17th of January the Gazette advocated a popular 
vote. On the 24th it suggested the adoption of one of two 
courses — either, "abandoning the work between Cincinnati 
and Lexington and finishing the road between Lexington 
and Chattanooga; or, finishing the road from Cincinnati 
to Emery Junction, and then connect with Knoxville at a 
cost of $1,800,000." On the 26th, it said: 

Had we been assured that the road would cost twenty millions or 



48 The Beginnings of the Southern Railway. 

sixteen, the enterprise would not have received our support. We con- 
fess to having been misled by the Trustees. The fatal mistake made 
by the Trustees was in locating and undertaking the road between 
Cincinnati and Lexington. We say this with full knowledge of all 
the arguments used in favor of that location. We opposed it at the 
time, and continued our opposition until assured by the Trustees that 
the ten millions of dollars, with the donations received, would build 
the road from the Ohio River to Chattanooga, or come so near doing it 
that nobody could make any fuss about it. The Legislature should 
order an investigation. 

On the same day a memorial from the Trustees, said to 
have been written by Judge Taft, addressed to the General 
Assembly, was published. It quoted the estimate made by 
Mr. I/yvett, spoke of the importance of the trade of the 
country to be opened, and the distressing results which 
would result from the abandonment of the work. It said: 

If the funds shall be promptly furnished, the whole line of 
railway can be finished, with bridges and superstructures complete, 
by the 1st of July, 1877. The Trustees do not doubt that the road can 
be leased on fair terms without the expenditure of more than the ad- 
ditional six million dollars. They have confidence in the skill and 
integrity of their engineer, and think it safe to rely upon his estimates 
as submitted. 

The Trustees regret the necessity of asking the further use of the 
city's credit, and if it were possible to lease the road in its present un- 
finished condition on favorable terms, or on any reasonable terms, and 
power could be granted to do so, they would recommend the enact- 
ment of a law for leasing instead of building it. But they have found 
no such opportunity. The time is unfavorable; nor is the work suffi- 
ciently advanced for such a lease. 

The three alternatives proposed at this time were (1) 
the abandonment of work north of Lexington; (2) the re- 
duction of the amount asked for from six millions to three; 
and (3) the using of the work already done as a basis for a 
mortgage for the six millions asked. The Board of Trade, 
however, on January 29, adopted unanimously a report in 
favor of granting the Trustees' request. There was also 
discussion, bitter like all the rest of it, as to whether the 
bond issue should be submitted to a popular vote. 

Right in the midst of it came a report from the three 



The Six Million Issue. 49 

Master Commissioners appointed in the Spring of 1875, "to 
take testimony and report in writing in relation to the dis- 
charge of the duties of the trust." Mr. Mansfield and 
Mr. Stone made a majority report and Mr. Pullan one for 
himself. The reports, together with the testimony, filled 
about ten columns of the papers. They were published, in 
full or lengthy abstracts, on February 4. There were 
two facts brought out which added to the growing feeling 
against the Trustees. One was this extract from Mr. 
Ferguson's testimony before the Commissioners: 

When I drew the Wright Bill in February, 1873, I drafted an ad- 
ditional section authorizing the issue of five millions more of bonds, 
but on the advice of influential citizens to whom the bill was shown 
this section was withheld. 

The other development was that the net amount re- 
ceived for the ten millions bonds was, by reason of the 
allowing of commissions, less than the face value of the 
bonds by about $ 140, 000. Both of these points were 
sharply commented on by the opponents of the bill, and 
severe stress was laid on the latter point by Mr. Pullan in 
his minority report. 

One extract from the majority report probably shows 
in a fair and candid way the general feeling. It says: 

For a long time prior to the issue of the bonds and putting them 
on the market there was an opposing element in Cincinnati composed 
of many intelligent and respectable engineers who could not see the 
forthcoming benefit, commensurate with the outlay, to be derived 
from the construction of the Cincinnati Southern Railway, which had 
its influence, adverse to the sale of the bonds at any price, felt in the 
large cities of the east. Coupled with this, the steady and persistent 
opposition to the road because of the prospect of heavy taxes to pay 
interest on the bonds, without any hope of relief, as it was claimed, 
for years, from the profits of the road, on the part of a portion of the 
most energetic and respected journals of the city, we are led to think 
that the sales were as well made as ought to be expected under the 
circumstances. 

The compensation was fixed as follows: 



50 The Beginnings of the Southern Railway. 

MAJORITY REPORT. MINORITY REPORT. 

Miles Greenwood... $18,000 $16,832 

R. M. Bishop 10,000 8,701 

Philip Heidelbach 8,000 7,201 

William Hooper 3. 000 2 >99 2 

E. A. Ferguson 25,000 10, 701 

Simultaneously with the publication of this report came 
the announcement of the resignation of Mr. Heidelbach as 
Trustee and also a call from Mayor Johnston for a meeting 
of citizens at Robinson's Opera House to consider the sub- 
ject; and a call appeared numerously signed asking those 
to meet who objected that the bill allowed the people to 
have no voice in the matter. About the same time, too, 
there was published a draft of the Common Carriers' Bill by 
which it was proposed to supplement and complete the pro- 
visions of the Six Million Bill. 

There was a good deal of bewilderment in those early 
days of February, 1876. The Times was recalling the pro- 
visions of the general circular of June, 1869, and saying 
' 'there are only a few copies in existence and we suppose 
the managing Trustee would pay a high price for them." 
The Gazette was suggesting "a new element in the Board," 
and the Volksblatt called for the resignations of a majority 
of the Board. The Commercial said, "If the question was 
before us to-day whether Cincinnati should enter upon the 
gigantic enterprise of building the Southern Railroad, with 
the enlightenment we have upon the subject, we would 
vote 'No.'" 

One day the Commercial broke out thus: 
The Trustees long ago fixed the policy of building the road, and 
have pursued it tenaciously. They have spent ten millions pursuant 
to their policy. It is too late to change it. What shall we do ? Lease 
the 300 miles of chaos we have to show ? That cannot be done. 
Abandon the lower end of the road ? That is impracticable. Let it 
be announced that we totally abandon the road, and with it all hope 
of direct communication with the cities of the South, and it will be, to 
accept Mr. Ferguson's bitter phrase, " The suspension of Cincinnati." 
We cannot afford it. 



The Six Million Issue. 51 

But slowly, and yet day by day, public opinion began 
to settle, or rather public opinions. For it was getting 
more evident each day that there were two opinions. 
Slowly, driven by the force of circumstances, the logic of 
the situation, men were coming to the support of the 
Trustees. On the other hand, the opposition to the 
Trustees had been gathering force ever since 1872 and it 
was felt that if ever the overthrow of the trust was to be 
accomplished the time and hour had come. 

The first clear definite note came from the Robinson 
Opera House meeting on the evening of February 7. The 
house was full. The Hon. Alexander Iyong presided, with 
a long list of Vice-Presidents, among whom were Earz An- 
derson, George K. Shoenberger, A. S. Winslow, Joseph 
Emery, Dr. James Graham, John Hauck, N. L. Anderson, 
Peter Gibson, Samuel Davis, Briggs Swift, Henry Hanna, 
W. P. Hulburt, George Weber. The speakers were Mr. 
Long, Mr. Haussaurek and Mr. W. M. Corry. Every 
hostile reference to the policy of the Trustees was greeted 
with applause. The meeting was good-tempered, but it was 
in earnest. A curious incident marked the meeting. After 
the resolutions had been adopted, and the lights were about 
to be put out, Mr. J. I,. Keck offered one hundred dollars 
for the use of the house for an hour. His offer was ac- 
cepted, and "go hire a hall," became popular catchwords. 
For sixty minutes Mr. Keck, who began by saying he had 
voted against the original ten millions issue, spoke for the 
Six Million Bill — and he was listened to good-homoredly, 
and even with applause. 

The resolutions, that were adopted unanimously and 
with great applause, were a fair statement of the gronnds 
on which the policy of the Trustees was being attacked. 
They w T ere as follows: 

Whereas, The Trustees in the beginning represented that the 
road from here to Chattanooga could be built for ten million dollars; 

Whereas, Instead of obtaining the consent of Kentucky and 
Tennessee for the city to build a road through their territory, the 



52 The Begi?mings of the Southern Railway. 

Trustees had themselves incorporated in each of these states, on terms 
which jeopardize the rights and property of Cincinnati in said road 
and have done this at an expense of nearly $75,000 for lawyers, agents 
and lobbyists; 

Whereas, The said Trustees in disregard of a strongly expressed 
public opposition, have undertaken to build a rival road to Lexingtou 
at a cost of millions of dollars, without adding thereby one foot of new 
territory to the market of Cincinnati, and have scattered the money 
all along the line of railway accomplishing nothing; 

Whereas, The said Trustees in the management of the major 
part of the loan have violated the usage in such cases, and particularly 
the usages of Cincinnati, in not advertising for bidders, and paying 
the enormous commission of one and one-half per cent. , and in giving 
the purchasers several months' option, by all of which hundreds of 
thousands of dollars have been lost to the city; 

Whereas, By refusing to issue a six per cent gold bond, as urged 
thereto by Mr. Hooper, one of their own members, for sale in the 
London market, this city has been mulcted, as Mr. Hooper states,in 
the sum of three millions of dollars; 

Whereas, The Trustees have concealed from the citizens, until 
the ten millions were nearly gone, that millions more of money would 
be required, and by suddenly springing the six million bill under the 
threat of the suspension of the city and the abandonment of the work, 
if it be not immediately passed, have put the climax on a long line of 
errors and mistakes, thus imperiling the success of the road and the 
welfare of the city; 

Resolved, That it is the sense of this meeting that the Legis- 
lature of Ohio should refuse to authorize the proposed addition of six 
millions to the oppressive railroad burden of Cincinnati. 

Resolved, that if the ten millions now expended or nearly ex- 
pended, together with the rights of way obtained and donations re- 
ceived by the Trustees do represent real value, and not merely the 
ruins of wasted substance, it is our belief that it would not be difficult 
to lease the road with a view to its completion by private capitalists 
if the proper efforts were made to bring about the consummation; but 
if it should be true, as announced by the Trustees, that after all the 
expense and labor bestowed upon the road it is so incomplete that it 
could be neither leased, mortgaged nor sold, this lamentable condi- 
tion would show the unfitness of the Trustees for the task they have 
undertaken and the danger of continuing the present Board as the 
representative of the road. 

Resolved, That self-preservation is the supreme law of communi- 
ties as well as individuals, and that the jeopardy of the ten millions, 



The Six Million Issue. 53 

followed by six millions more would give Cincinnati a blow which 
must distress her people, and increase her taxes beyond endurance. 

Resolved, that a committee be appointed to report a draft of a 
memorial to the General Assembly, expressing the views of this meet- 
ing, and that copies of these resolutions be sent to the President of 
the Senate and the Speaker of the House. 

The discouragement and distrust of all the representa- 
tions and statements of the Trustees, which were conspicu- 
ous in these resolutions were not less marked in the me- 
morial, that, in conformity with the resolutions, was 
drawn up and sent to the General Assembly. After setting 
forth thirteen grounds of objection, doubting the constitu- 
tionality of the bill; affirming that the value of the road was 
greatty exaggerated, and the cost of construction largely 
underestimated; that six millions would not be sufficient; 
urging the unfitness of the Board and the heavy taxes, the 
Memorial asked: 

1. The Trustees shall be ordered to advertise and offer within 
six months, to lease or sell the road, with all its belongings, to the 
highest bidder, subject to a pledge on his part, made under a proper 
guarantee, to complete, equip and run the road to Chattanooga, 
within two years, at his own cost and subject also to the approval of 
his bid by the qualified voters of the city at a special election. 

2. The additional $6,000,000 shall not be granted until after the 
failure of the Trustees to, as above stated, lease or sell the road, or of 
the citizens to confirm their bargain. 

3. The additional $6,000,000 shall not be granted as above pro- 
vided, except after reorganization of the present Board of Trustees, 
stipulating that not more than two shall receive any compensation, 
and that these two shall be men having practical experience in rail- 
road building. 

This memorial was signed by Julius Dexter, F. Has- 
saurek, N. 1^. Anderson, C. W Woolley and Alexander 
Long. On the other hand, a large petition signed by more 
than 3,000 of the most prominent merchants and manufac- 
turers of the city, headed by John Shillito & Company and 
Robert Mitchell & Company, was sent to Columbus at the 
same time asking for the passage of the bill. So was also a 
resolution from the Common Council, " requesting our rep- 



54 The Beginnings of the Southern Railway. 

resentatives in the General Assembly to oppose the six mill- 
ion bill, or any other amount, and to use every effort to 
amend the bill so as to provide for a popular vote. ' ' 

The bill passed the Senate, without amendment, by a 
vote of 24 to 6, on February 9. "This prompt action," 
said the Enquirer , * ' will be satisfactory to our business 
men and taxpayers generally." The same paper, referring 
to the demand by Common Council for a popular vote, said, 
"It is simply the growl of wolves." February 14 the 
Times printed a double-leaded editorial in which it spoke of 
" the shameless course," " the open defiance of public opin- 
ion," "the waste of money, to suit the schemes of Mr. 
Alex. Ferguson," "the terrible muddle;" charged that 
"the Wright Bill was conceived in iniquity and born in 
corruption," and called for an investigation by a committee 
of either Council or the Legislature. 

On the 24th of February the House amended the bill, 
in two important respects : it provided for a popular vote ou 
March 14, and it adopted an amendment offered by Mr. 
Dirr, of Hamilton County. 

As amended, the bill passed the House by a vote of 81 
to 10, and the amendments were unanimously concurred in 
the same day by the Senate ; and the same day the bill was 
enrolled, signed, and became a law. The fight was then 
transferred to the city, and the Board of Trade said, in a 
report adopted March 1 , " The interests of Cincinnati are 
trembling in the balance." 

What the Enquirer called ' ' the bitter and implacable 
double - leaded warfare of the Times ) ' ' continued. It at- 
tacked the Legislature, the bond transactions, the King's 
Mountain Tunnel expenditures, and the relations of Mr. 
Bishop with contractors. It estimated that the interest and 
sinking fund charges on $16,000,000 would amount to 
$4,007 a day. 

Among the features of the closing days of the short 
campaign was the publication of a two-column address by 
Judge Dickson, "To Citizens." He said: 



The Six Million Issue. 55 

The great manufacturers and the merchants forced this project 
upon the city; they said it was essential to their special interests; they 
complained that the real estate owners would not voluntarily contrib- 
ute ; they sought to coerce them; they succeeded; they have got from 
the general public ten millions of money; they said this would build 
the road. Only ten millions gone, and what are the effects ? Was 
there ever such alarm and apprehension in our city ? All local im- 
provement has ceased ; our streets are uncleaned ; our revenues are 
impaired ; our laborers without employ ; the wives and children of our 
faithful policemen and our scarred and bronzed firemen must have less 
and coarser food and clothing, that this Southern Railroad may go on. 

THe Times said, the day before the election : 

If the only question was simply one of confidence in the Trustees, it 
would be overwhelmingly voted down. But the matter is unfor- 
tunately much more complicated. It is made to involve not only the 
protection of the ten millions already invested, but the securing of a 
road Cincinnati greatly needs. It is urged that we are into the bog 
now, and can only get out by the investment of six millions more. 
It is urged that the blunders and mismanagement of the Trustees are 
fixed beyond recall , and that the only possible way of saving ourselves 
is to furnish them with more money. In this argument — humiliating 
as it must be to those who make it, and intensely aggravating as it is 
to all just-minded people in our midst— lies the only strength of the 
advocate of the six millions. 

Mr. E. W. Kittredge spoke at a six million meeting. 
He said he had voted and worked against the issue of the 
ten millions; that he had applied to the City Solicitor to 
bring suit to test the constitutionality of the Act; that he 
had himself gone to Columbus to argue in the case when it 
was brought before the Supreme Court; but he bowed to 
the will of the majority and the decision of the Court. He 
concluded by saying: 

When you confess that you have determined to abandon this en- 
terprise, the moral downfall of the city will be added to its financial 
disaster. 

The Commercial said a day or two before the election: 
We do not believe the Southern Road will pay eight, or six, or 
five, per cent on the investment. We shall do very well indeed if we 
get half the interest on the bonds. But we believe that the time will 
come, after years of hard work, and perhaps of weariness and im- 
patience, when the truth will be plainly seen that after all Cincinnati 



56 The Beginnings of the Southern Railway. 

not only did a plucky thing in shouldering an enterprise that tested 
her strength and that seemed almost a profligate waste of her resources, 
but she got her money back. 

The Enquirer said about the same time: 
We can with difficulty imagine any voter in his senses and ani- 
mated by a single spark of civic pride, or influenced by the common 
courage of men reliant upon their future, refusing a second grant to 
make the first productive. A point of honor is added. 

The Gazette the morning after the passage of the Act 
had said: "It is understood a bill will be introduced into 
the legislature reconstructing the Board of Trustees. The 
passage of such a measure would be the means of securing 
an almost unanimous vote in favor of the six million bill." 
The day before the election, however, it said: 

We suppose that all rational men are aware that to refuse this 
loan and to stop where we are is to sacrifice the ten millions we have 
already invested in the road. There is no alternative but to vote the 
six millions or lose the road and the ten millions we have put into it. 
The talk of leasing a road which has no existence is wild. We doubt 
if any seriously think this practicable. To suspend the work would 
be to subject it to great losses and deterioration to no end but to re- 
sume it again under great discouragement and difficulties. 

We must build the road before we can lease it. We must build it 
to save the large sum we have invested. This seems now the surest 
way to reduce the burden. The amount will not strain our financial 
capacity. For the credit and good fame of the city in the South and 
everywhere we cannot afford to abandon the work now. 

The next day the Gazette ventured this prediction: 

We now record the opinion that the company that leases the road 
upon terms that will ultimately reimburse the city will have a paying 
investment. 

On March 9 the following circular was published, ad- 
dressed to the voters of Cincinnati: 

The undersigned, Trustees of the Cincinnati Southern Railroad, 
in view of the vote about to be taken on the question of issuing six 
million of bonds for the construction of the Southern Railway, say 
that they are satisfied that the expenditure of that sum will put the 
road into such a condition that it can be leased advantageously to the 
city, and that the purpose of the Board is so to apply the fund as to 
accomplish that end without any further advance by the city of bonds 



The Six Million Issue. 57 

or money. That Mr. Ferguson, their Co-Trustee, is absent from the 
state on account of sickness in his family, and therefore cannot sign 
this paper. 

The statement was signed by Alphonso Taft, Miles 
Greenwood and R. M. Bishop. The day this statement 
was published Judge Taft was appointed Secretary of War, 
to succeed Mr. Belknap. To fill the two vacancies then 
existing the appointments were announced on March 12th, 
of General Godfrey Weitzel and Mr. Henry Mack. 

The election took place on the 14th of March. There 
were no parading bands and the fire bells did not ring. 
This was the result: For the six millions 21,433; against, 
9,323; total vote 30,756. 

As compared with the vote of June 26, 1869, the total 
vote went up from 16,935, being an increase of 13,811. 
The vote for the road had increased from 15,435, being an 
increase of 5,998; the vote against the road had increased 
from 1,500, being an increase of 7,823. The vote polled 
was approximately a full one. A month later, at the 
regular April election, the total vote was 35,353. 

"You must not ask for any more," the Commercial 
said the day after the election. It was not seriously be- 
lieved that "any more" would be asked for. The Trustees' 
memorial to the General Assembly and the card of the three 
Trustees seemed conclusive. If anybody thought of the 
Dirr amendment there is no sign of it in either newspapers 
or reports of committees. Before going farther the effect 
of that amendment must be studied. 



58 The Beginnings of the Southern Railway. 

IX. 
THE DIRR AMENDMENT. 

The policy that was in the mind of Mr. Ferguson, as to 
building the road, when he drew the original act, is broadly 
suggested in the third section of the act, which authorized 
the Trustees "to receive donations of land, money, bonds 
and other personal property, and to dispose of the same in 
aid of" the fund to be created; and in the ninth section au- 
thorizing the Trustees, ' 'as fast as portions of the line are 
completed, to rent or lease the right to use and operate such 
portions upon such terms as they may deem best, but such 
rights shall cease and determine on the final completion of 
the whole line, when the right to use and operate the same 
shall be leased by them to such person or company as will 
conform to the terms and conditions which shall be fixed and 
provided by the Council of the city." 

It was an era of great activity in railroad building at 
the time the Southern Railroad Bill was passed. The ex- 
pectation was that both Kentucky and Tennessee would ex- 
tend welcoming hands to a new enterprise, and that so far 
as the laws of those states would permit, towns, cities and 
counties along the line of the road would make donations. It 
was also expected, rather, perhaps, hoped, that considerable 
donations or gifts, would be received from private persons 
whose property might be benefited by the location of the 
proposed road. 

More than that, authority was explicitly given in the 
ninth section for detailed construction, and the leasing of 
the parts of the road as they were completed. 

The unexpected opposition in Kentucky led to dis- 
couragement in Cincinnati, and the donations which had 
been looked for did not come. Moreover, the railway fever 
had subsided. The long delay led to a change in the policy 
that had been originally marked out. It was decided that 



The Dirr Amendment. 59 

on the whole it was better that the construction should be 
let as one entire contract. Accordingly, when the ' 'Wright 
Bill" was presented, and passed in April, 1873, the fourth 
section provided that the Trustees "shall have power to 
contract for completing and leasing the whole line of rail- 
way." In a few words, change in times and conditions had 
led to a change from the original policy of building, with the 
aid of outside contributions, the entire line of the road, to 
the policy of contracting for completing and leasing. Under 
the new policy the Trustees expected to furnish to some 
company what the ten millions of dollars w r ould have ac- 
complished, and contract for the completion of the road by 
aid of its lease to such company, the road to revert to the 
city at the end of the lease. 

Thus the laws stood, wdien the crash of September, 
1873, occurred. The panic wiped out the railroad capitalists 
of the United States. "I know of instances," said Mr. 
Ferguson later, * 'when men who were worth from five to seven 
million of dollars before that panic, were, after the panic, 
w T orth nothing. ' ' There were only two things then for the 
Trustees to do — either abandon the whole work; or, 
abandoning the "completing and leasing" policy of the 
Wright Bill, go back to the original policy of detailed con- 
struction. They chose to go back to the original policy, 
and as has been seen, let their first contract in December, 
1873, and located the entire line on February 12, 1874. 

Later, the times began slowly to improve, and once 
more it became possible to contemplate, with some degree 
of hope, the possibility of a return to the "completing and 
leasing" theory of the "Wright Bill." Accordingly, when 
the ten millions had been spent, and application to the Gen- 
eral Assembly for authority to issue six millions more of 
bonds became necessary, the second section of the bill which 
was drawn up and presented, provided simply that "the 
said Trustees shall have power to lease the whole line of 
railway for which they are Trustees, after its partial con- 
struction and before its completion, upon the terms and con- 



60 The Beginnings of the Southern Railway. 

ditions, and in the modes, provided for by the fourth sec- 
tion' ' of the Wright Bill. It was this section which the 
Dirr Amendment changed. The bill as it finally passed 
the House and Senate, provided as follows: 

Section 2. Said Trustees shall have power to lease the whole 
line of railway for which they are Trustees, after its completion, upon 
the conditions and in the mode provided for by the fourth section of 
the Act of April 18, 1873. Before leasing said road the Trustees shall 
advertise for six months in the leading newspapers of the United 
States for proposals for leasing the road; said advertisements shall 
correctly state the conditions and restrictions under which said road is 
to be leased, and the contract or lease therefor, if entered into, shall 
be awarded to the most favorable bidder. 

The Trustees' Bill authorized the lease of the road ' 'be- 
fore its completion;" the Act authorized a lease ' 'after its 
completion." The Trustees' plan was to throw part of the 
burden of completion on a leasing company; the Act forced 
the city to assume the entire burden. Mr. Hollander says: 
"The insertion of this amendment was one of the most un- 
fortunate episodes in the history of the railway." He says: 

It compelled a radical change in the policy of the Trustees, with- 
out providing the additional means for effecting it. The $6,000,000 
loan which the act authorized was sufficient to finish the road only in 
conjunction with the "completing and leasing" contract. The 
amendment obliged the Trustees to undertake the detailed construc- 
tion of the permanent way of the road, sub-structure and equipment, 
with funds merely sufficient as careful estimates had shown, to com- 
plete the sub-structure. 

The General Assembly passed the Dirr Amendment 
which the Trustees did not want; and did not pass the 
Common Carriers' Bill which the Trustees did want. The 
original Six Million Bill was drawn to complete and lease 
the road, and the Common Carriers' Bill to enable the or- 
ganization of a company to take the lease. Mr. Ferguson 
testified before the Investigating Commission in November, 
1878: 

I believe the cars would have been running into Chattanooga six 
months ago if the policy of the $6,000,000 bill had not been reversed. 
If it had been passed as drawn, it is my judgment it would have com- 
pleted the road and left a handsome sum for terminal facilities. I al- 



The Dirr Aviendment. 61 

ways contemplated that the city's means would be supplemented by 
the means of others. 

Neither during the short time the amendment was pend- 
ing, nor after its passage, did it create during the campaign 
of 1876, comment. Not one of the watchful Columbus cor- 
respondents called attention to it, nor does it appear to 
have excited comment at home. In view of later events, it 
seems incredible that the three Trustees, Judge Taft, Mr. 
Greenwood and Mr. Bishop, would have signed the circular 
of March 9, if they had been aware of the nature of the 
hastily-adopted and ill-considered change. It is to be no- 
ticed that Mr. Ferguson's name is not attached to this dec- 
laration. 

The morning after the passage of the amended bill, the 
Commercial, with which Mr. Ferguson's relations had be- 
come, and to the end continued to be, close, said in a brief 
paragraph: 

We would have preferred that the Southern Railroad question 
should not have been placed before the people in the abrupt form of 
six millions or nothing. It would have been much better to vote those 
millions for the permanent way of the road without the formality of a 
popular vote, and to have passed the Common Carriers' Bill with an 
amendment prescribing immediate advertising for leasing purposes. 
Then we might have secured the road and made our escape by putting 
down three additional millions. 

But this suggestion was not followed up. Besides, the 
harm had been done, the costly blunder had been made. 
The public, the voters of Cincinnati, were not aware of the 
change that had been made in the carefully conceived plans 
of the author of the bill. In the light of history, however, 
the evil results of legislative interference are very clear. 



62 The Beginnings of tke Southern Railway. 

X. 

A MAYOR'S VIEW. 

Shortly after the six million loan had been voted, 
Mayor Johnston sent in his annual message to council. It 
contained the first extended treatment the road had received 
from the municipal authorities. The Mayor said: 

The financial condition of the city may well excite your most 
serious consideration. Its bearing is immense upon our present 
prosperity and future growth. It is not long since we could justly 
boast of being, in comparison with other large cities, free from debt. 
Such a statement cannot now be made so strongly. This is our 
present financial condition : Independent of the Southern Railroad 
debt now in process of creation there is a debt of about seven and one- 
half millions of dollars. When the Southern Railroad was com- 
menced it was the impression of many of our citizens that it could be 
built for ten millions. The estimate of the engineer now is that it 
will require sixteen millions to complete it. Thus our anticipated debt, 
without further additions, which are quite possible, may be estimated 
at twenty-three and one-half millions of dollars. 

This is equal to one-eighth of the whole taxable property of this 
corporation. The annual interest upon it will not vary much from 
$i, 700,000. This is an amount equal to nearly one-half of our whole 
taxation before the new debt was contracted. The sudden addition of 
nearly one-third to the burden of the taxpayers cannot but be ma- 
terially felt. It will diminish incomes. It will bear heavily upon 
trade of every description. It will be especially injurious to manu- 
facturers. If continued for any length of time it may be followed by 
their removal to points where taxation is less, and where their wares 
can be manufactured at a cheaper rate. The interest alone is a tax of 
$40.00 per annum on every voter. 

There is another feature about the debt which may well be con- 
sidered. Every thirteen years the principal would be paid in simple 
interest alone. But if compounded, which would be a capitalist's way 
of considering it, we should pay it in a single decade, and the debt 
still remain. 

This is not the true policy. The city possesses property which 
it could dispose of at a figure which would nearly extinguish the en- 
tire debt. 



A Mayor's View. 63 

Mayor Johnston suggested the sale of the Wharves, 
the Water Works, and the Work House lot, and then said: 

The Southern Railroad, it is admitted, should be sold as soon as it 
is completed. Is it necessary to wait for that event ? The Trustees of 
the road should be considering the question of sale; of seeking parties 
who would give us what we have expended on it, and then go forward 
and complete it. We believe it to be a valuable investment. We are 
confident that it is a road that will transact a large business and pay a 
good dividend. The city cannot conduct it to as good an advantage 
as individuals. It was never designed that the corporation shonld per- 
manently, for any great length of time, own it. 

Granting that it is an excellent thing for us to exclusively own 
and run a railroad, possess water works, be the proprietor of w T harves 
and to have vacant lots, yet there is one thing that is better than all 
this. That is, to be out of debt. Pay no interest. Interest is a moth 
as devouring as cancer. It takes hold of the body politic just as it 
does an individual. No interest and no debt means small taxation. 
Small taxation means manufacturing, commercial and business pros- 
perity. 

Until we have been able to reduce or extinguish our interest it is 
manifestly the dictate of prudence to embark in no improvement of an 
extensive character. To a large extent the work on costly sewers and 
avenues should be temporarily suspended. Only money should be 
appropriated that is indispensable for the preservation of the streets 
and the accommodation of the public. 

In the same message he referred to a litigation that had 
arisen respecting the tax rate, the question at issue being 
whether the interest and sinking fund charges for Southern 
Railroad bonds should or should not be included within the 
limit of sixteen mills, which at the time was the maximum 
rate allowed by law for ' 'cities of the first grade of the first 
class. ' ' Difference of opinion had developed in the latter 
part of 1875, and opposition had arisen to the view of the 
Trustees that the Southern Railroad lines were under exist- 
ing law outside the statutory limit. Mayor Johnson said in 
his message: 

By a decision of the Supreme Court the tax levy for all municipal 
purposes, which had been limited to sixteen mills, was virtually cut 
down to twelve, by requiring that the four mills necessary to pay the 
interest on the Southern Railroad bonds should be within the sixteen. 



64 The Beginnings of the Southern Railway. 

This necessitated a reduction of twenty-five per cent in the city's ex- 
penditures; and the manner in which that reduction should be made 
and how it should be done were puzzling municipal problems. 

One of the means that was resorted to was the adoption 
of a moonlight gas- schedule. On full moon nights, four 
times a month, there was no gas; and as the moon waxed 
or waned the public gas lighting was decreased and in- 
creased. The first ■ night the gas lamps in front of the St. 
Nicholas were draped in mourning. Many citizens used 
lanterns. The Enquirer said: 

The shutting off of the gas light is a humiliation; it is a shame 
and a disgrace to the city; better no fire department, no Southern 
Railroad than to grope about the streets in darkness. 

In the Finance Committee of the Common Council 
Alderman Voight said: "It is the Southern Railroad debt 
that is crowding people, and who but the Cincinnati public 
is responsible for that debt?" "The mob, the mob," Mr. 
Carson, interrupting, said, and he added, "A storm is brew- 
ing that will break out in the next six months; the burden 
of taxation bears down everywhere; Europeans would rise 
and revolutionize under such burdens as we have. ' ' 

The Southern Railroad levy that year, including the 
Southern Railroad sinking fund levy, was 7.32 mills out of 
a total municipal levy of 19.32 mills — more than one- third. 
Is it strange that people groaned ? 



Selling More Bonds. 65 

XI. 
SELLING MORE BONDS. 

General Weitzel declined the appointment to the Board, 
to the general regret of the public. March 22, 1876, Mr. 
John Schiff was appointed and gave bond. Thus of the 
original Board only three remained — Messrs. Greenwood, 
Bishop and Ferguson — when the work of spending the six 
millions began. 

April 3, 1876, forms of bids for bonds were adopted by 
the Board of Trustees, and circulars were sent to the lead- 
ing bankers and brokers Eight days afterward, in response 
to the circular, the Trustees opened bids for $3,000,000 ad- 
ditional bonds, and awarded the issue to Espy, Heidelbach 
& Co., at their bid of par, and thirteen one hundredths 
premium. The bonds were gold bonds, and bore six per 
cent, .interest. The sale netted the city $1,500 premium. 
The remainder of the authorized issue was not sold until 
the next year, when they were taken by Kuhn, Loeb & 
Company in seven-thirties, at a premium of 343- thousandths. 
The net proceeds of the two issues, the one of ten millions 
and the other of six, were $15,866,710.79. 

Attention of the public was not again directed to the 
work until the fall of the year. A great presidential cam- 
paign was in progress, and voters of Cincinnati were much 
more interested in the prospects of Hayes on the one side 
and Tilden on the other, than in the work of the Cincinnati 
Southern Railroad. Still, early in September, joint com- 
mittees were appointed by the Board of Trade, the Chamber 
of Commerce and the Board of Transportation, to confer 
with the Trustees "as to the best mode of operating the 
road, on its completion, so as to derive the greatest benefit 
to our city." About this time reports became current that 
there were serious differences of opinion between the Trus- 



66 The Beginnings of the Southern Railway. 

tees, with Greenwood, Bishop and Mack on the one side, 
and Ferguson and Schiff on the other. It was said that Mr. 
Ferguson threatened to resign. It was also said that "A 
portentous whisper comes from the abyss behind the curtain 
in the Southern Railroad Board that the Trustees will in the 
course of time want more money." All these reports found 
their way into the newspapers, and thus became common 
property. And why should they not ? Was not the road 
the property of the city ? And was it not the taxpayers' 
money that was being spent ? And were not the taxpayers 
entitled to all the information ? And were they not to be 
consulted as to expenditures? And were not the newspapers 
and the various boards and organizations representatives of 
the city as well as the Trustees ? Is not publicity an in- 
separable incident of municipal ownership ? At any rate, 
it was such incident in the history of the Southern Railroad 
— and is still. 

The joint committee of the three boards listened, on 
September 29, to a report from a sub-committee, consisting 
of M. Macneale, Clement Olhaber and Abner L. Frazer. 
They said: 

Mr. Ferguson deeply regrets the failure of the Common Carrier 
Bill, inasmuch as there is no state law now existing under which a 
stock company can organize to lease this, or any other road, thus ren- 
dering it necessary to organize under the law of some other state, or 
get special legislation in this. Your Committee would report that the 
Trustees seem to rely on leasing the road as the means of providing 
for its final completion with side-tracks, depots and equipment. Our 
error, if there was one, was in not properly considering the legislation 
under which we are acting. 

After adopting a preamble, reciting that "the object 
was not to invest surplus capital in a dividend-paying stock, 
but to obtain great advantages for the manufacturers and 
commercial interest of Cincinnati," they resolved against 
leasing, in favor of the repeal of all legislation requiring 
leasing, and that authority should be obtained to operate 
the road by Trustees, and for the erection of a Union 
Depot near the center of the city. 



Selling More Bonds. 67 

After two weeks consideration of this report, the gen- 
eral committee resolved unanimously, on October 13, that 
"the Trustees be authorized either to run the road or lease 
it, that the sense of this meeting is that the Trustees should 
run the road." The comment of the Volksblatt was "the 
management of the road by the city does not mean the com- 
mercial prosperity of the city, but its ruin." Opposition 
to this policy developed in various directions. Public meet- 
ings were held, in which some speakers favored the leasing 
of the road as it was, and others the appointment of "a 
competent engineer to report an estimate of the cost of com- 
pleting the road," and then leasing it if the cost of com- 
pletion should not be too large. All discussion only served 
so show that public opinion was not only divided but un- 
settled and chaotic. It was stated on the 26th of November 
that three of the six millions had been spent, that contracts 
were out for more than two millions additional, and that a 
rupture was imminent between Mr. Ferguson and Mr. Iyov- 
ett, the Chief Engineer. In fact, on December 6, Mr. 
L,ovett sent in his resignation. 

The year was closing. A call for more money was 
threatening. Taxpayers were burdened as they paid their 
December bills. The Legislature was about meeting, and 
the plan for relief had not been formulated. The year ended 
in the midst of uneasiness, uncertainty and apprehension. 



68 The Begiymings of the Southern Railway. 

XII. 
ORGANIZING THE COMMON CARRIER COMPANY. 

The General Assembly met in January, 1877, and on 
the 10th, General Bates introduced a bill repealing the Dirr 
Amendment. After considerable delay and some discussion 
the bill passed both branches April 24. 

The Common Carrier Bill was brought forward at the 
same time as the repeal bill. Some opposition to this bill 
developed, but not of a serious character, and on April 13 
that became a law. It authorized a company, organized 
under the laws of Ohio, "to lease and to hold and operate 
any line of railroad and its appendages either before or after 
its completion, owned by a municipal corporation of this 
state, and any railway connected therewith lying without 
this state as may be necessary for convenient dispatch of its 
business." 

Six days after the passage of the Common Carrier Act, 
a large meeting was held in Cincinnati at which Mr. Fergu- 
son presented the plan of the Trustees for the organization 
and operation of a company under the act. He prefaced 
the presentation of the plan by a lengthy and as one of the 
newspapers said the next day, "a very interesting," state- 
ment of the trust. He told the trivial circumstances that 
led to his drafting the original Southern Railroad Bill, and 
gave a sketch of the work of the Trustees.* One brief quo- 
tation is interesting. He said: 

We had no power under the original act to complete and lease 
the whole line. But by the act of April i8,"i873, known as the Wright 
Bill, that power was given us. If it had not been for the panic of that 
year, the Trustees would never have made a single contract to do the 
detailed work of building the road. We would have been a passive 
board from the beginning. 

He expressed the view that the company proposed to 
be organized under the plan suggested by the Trustees could 

*" See Appendix, p. 112. 



Organizing the Common Carrier Company. 69 

return the road to the citizens of Cincinnati within fifty 
years clear of debt and entirely unincumbered. 

Two days later, April 20, an excursion train filled with 
many of the most prominent and wealthy men of the city, 
went to the Kentucky River Bridge. The bridge had been 
completed on February 20, and was tested the day of the 
excursion — "to the great credit of the contractors," Mr. 
Bouscaren subsequently reported, "whose bold method of 
erection will be recorded amongst the triumphs of modern 
bridge building." 

The Enquirer of April 19 said of the plan of the Trus- 
tees as stated by Mr. Ferguson: 

This project offers the easiest and the most popular solution of 
the Southern Railroad problem, and the one which will prove most 
advantageous to the city that owns it. 

The Commercial said on April 28 : 

What is there needed beyond the six millions to give us a road ? 
If we allow the people along the line of the road to build their own 
stations, and economize as far as we can in side-tracks, and dispense 
with the idea of putting two or three million dollars into Millcreek 
Valley, and commence the operation of the road with leased locomo- 
tives and cars, about one million additional will secure a working 
road through from Cincinnati to Chatta?woga. 

There are appearances that practical railroad men are looking 
upon this great work with an ardent willingness to utilize it. If the 
people of Cincinnati do not take the stock of the Common Carrier 
Company the schemers will do it, and then will come the great ques- 
tion of possession and operation. It seems to us that there is no 
longer much, if any, doubt that the capital for the completion and 
building of the road will be forthcoming. The disposition of the 
schemers will be to exaggerate the existing difficulty and to discour- 
age the people of Cincinnati. There will be business for the road. 
The more dismal prophecies about it will never be realized. After 
some time, the people of this city will see the advantages of this road. 

In the same issue was printed a letter on the Southern 
Railroad from a well-known correspondent, "H. V. R." 
He had been over the line of road several times, and, just 
before the election on the Six Million Bill, the year before, 
had published an exhaustive letter on the state of the work 



jo The Beginnings of the Southern Railway. 

and the prospects of business. In the course of his letter 
of April 28, 1877, he said: 

If I remember correctly, only 1500 votes were given against the 
proposition. In the light of the contentions, opposition and clamor 
that have since developed, I cannot understand why there should have 
been such feeble opposition at the very time of all others when it 
should have come to the front, if it was to come at all. Hindsight is 
better than foresight, and considering all the circumstances in the 
case, it would in my judgment have been better for Cincinnati if the 
ten million proposition had been defeated, and that, I think, is the 
opinion of the majority of the people of Cincinnati. In other words, 
If it was all to do over again, with all the light now before them, they 
would not do it. I have had my ears fairly burned with adverse criti- 
cism and gloomy prophecy. I have heard Cincinnati spoken of as an 
aggregation of idiots for embarking single-handed and alone in the 
colossal undertaking. 

April 28 the Enquirer contained an account of a special 
car which, it said, had been ordered by the Trustees from 
Barney & Smith, of Dayton: 

It is arranged for day as well as night travel, with sleeping 
berths, elegant seats, and kitchen, wash-room, etc., in the most gor- 
geous manner. It cost about $10,000, if we are not mistaken. When 
the car was finished, and the Trustees saw the large bill, a slight 
doubt arose in their minds as to the way in which this nice arrange- 
ment would be criticised by public opinion, and they refused to receive 
the car, directing the Dayton company to sell it to some customer and 
saying that they would pay the difference. Up to last accounts it had 
not been sold. 

The Volksblatt the next day criticised this expenditure 
with vigor, and a translation of the Volksblatt article duly 
appeared in other papers. Attacks were also made against 
the Trustees on other grounds, and especially on the ground 
that they were trying to force the Common Carrier scheme 
on an unwilling people. Mr. Macneale opposed the scheme 
vigorously in communications to daily papers. So did Mr. 
Josiah Kirby. Mr. Kirby's communication was a lengthy 
one, and was printed in both the Commercial and Enquirer. 
It fairly sets forth the drift away from the Trustees of many 
who had been among the strongest supporters of the origi- 
nal act. Mr. Kirby said : 



Orgajiizing the Common Carrier Company. 71 

The Trustees' first mistake was in the head that drew the law so 
lamely as to require a commission at an annual cost of from $6,000 to 
$10,000, so as to enable one Trustee to get nearly twice as much salary 
as any other in the Board. The next blunder was to publish to a con- 
fiding public what they knew to be unwarranted, that the road could 
be completed for the sum of ten million dollars. Their next blunder 
was the violation of the terms of the first Ferguson law by the passage 
of the Wright Bill, to enable them to sell out before the road should 
be completed. Their next blunder was after they had discovered that 
the ten millions already expended was not a sufficient bribe to some 
railroad sharks to bite at, to present a full and, as they claimed, a 
thoroughly-considered estimate and publish it to the world that six 
and three-quarters millions more would be full and ample funds to 
finish the road in the style of railroad perfection already adopted, and 
then ask for six millions, thus conveying the idea that it might be 
finished for that sum if some of their work should be done on a less 
expensive scale; and finally after groping through nearly eight years 
of their imbecility and incompetent estimates, as clothed their entire 
stewardship with the suspicion of incapacity, they come forward and 
tell us that it will require nearly two millions more to complete the 
work and that the people of Cincinnati cannot be trusted to advance 
that sum in their corporate capacity, and therefore they will bribe 
some outside party to take it off their hands and pay them hand- 
somely to do it. 

While the Trustees have been thus constantly engaged in mold- 
ing public opinion in favor of their ways, they have been fighting 
with a bitterness almost unequaled every act or thought of the busi- 
ness man and taxpayer who pointed out a more safe and better way to 
run the road than they had suggested. But the Trustees say with a 
winning smile, we are going to have a Cincinnati company if we can, 
and, with a threat, if you don't give us a Cincinnati company, we will 
lease it to a foreign corporation. "Walk into my parlor, " said the 
spider to the fly. 

Those that were thinking of organizing a Carrier Com- 
pany were meantime at work. A Committee had been ap- 
pointed, and, on May 2, Mr. Tatem, Secretary and Auditor 
of the Trustees, addressed that Committee a letter in which 
he estimated the cost of completing the road at $2,064,677. 
He said: 

The Trustees are confident in the conjecture that the final com- 
pletion of the road will insure to the merchants and productive in- 



72 The Beginnings of the Southern Railway. 

dustries of Cincinnati all that the most sanguine of the projectors and 
supporters of the road have ever predicted. 

Commenting on this estimate and this prediction the 
Enquirer said: 

If the public, which a few years ago was told that this road would 
be completed for ten millions, is a little skeptical now, the public is 
not to be blamed, nor are the Trustees to be astonished. 

' 'We have two million dollars worth of work we want 
done on that road," said the Enquirer, on May 2, "and we 
want to know who will do the work and take his pay for it 
in the fewest 3^ears use of the road." 

"Cincinnati has bled for this road," the Commercial 
said. "The taxpayers are not alone those who are in- 
terested. There is not a laboring man or woman in town 
who is not personally concerned in this road. The interest 
on sixteen millions of dollars means higher rents and in- 
creased expenses of living if we cannot get value received 
out of this road." 

April 30, the Cincinnati Southern Railway Company 
was incorporated under the Common Carrier Act, with an 
authorized capital stock of $500,000 in shares of $50 each, 
and books for the subscription of stock were opened May 
10. In spite of the fears that had been expressed that an 
effort would be made to ' 'gobble the stock in the interest of 
schemers," there was no rush to subscribe, the first day's 
subscription amounting to only $32,500. The largest sub- 
scription was by the Cincinnati Union Stock Yards Com- 
pany, and was for 200 shares, or $10,000. Then interest 
seemed to subside. Instead of there being an effort to 
"gobble" the stock, the question arose in the public mind 
whether enough stock would be subscribed to enable the 
company to operate the road. 

The conditions of the proposed agreement were pub- 
lished, and with slight modifications were the same which 
were finally adopted. They provided for the running oi 
the road between L,udlow and Somerset, a distance of 159 
miles, and as compensation ten per cent on the paid up cash 



Organizing the Cavimon Carrier Company. 73 

capital and ten per cent, of the net earnings, the latter pro- 
vision being made to cover depreciation in property. The 
Trustees agreed that in case the net earnings were not 
sufficient to pay ten per cent., the Trustees world repa}^ to 
the compan}' out of their share the amount so deficient. 

1 'Subscriptions are lagging, ' ' said the Enquirer on May 
20. A da}' or two before, Mr. George H. Pendleton had 
inquired whether a proposition to operate the road by the 
Kentucky Central would be received. The Trustees had 
replied in the negative. This refusal was smartly criti- 
cized by the Enquirer. It said: "Many believe there has 
been an attempt on the part of the Trustees to force this 
Common Carrier scheme." 

Thus the situation remained until late in the afternoon 
of May 21. There had been subscribed $170,950 in stock, 
by 362 subscribers. A meeting of subscribers had been 
called for the next day, and with only about one-third of 
the total authorized capital subscribed for, it was felt the 
affair was drifting into a farce. Ten minutes before the books 
closed, a syndicate subscription was made of $300,000, the 
members of the syndicate being Henry Lewis, J. H. 
Rogers, P. Smith, R. M. Shoemaker, John Shillito, J. N. 
Kinney, Rufus King and C. W. West & Co. Thus the 
total subscription reached 9419 shares, of a par value of 
$470,950, and with 368 shareholders. 

The Enquirer said the next day: 

The company cannot run the road well without benefiting, or ill 
without hurting the city. It all looks as though the splendid road 
were triply guarded in the interest of the City of Cincinnati. 

The Gazette said in its issue the morning after the sub- 
scription: 

We are not of those who believe that the plan decided upon by 
the Trustees is the best that might have been adopted. On the con- 
trary, it is our opinion that the policy of a temporary lease or license 
should not have been adopted at all. The objective point should have 
been the completion of the road, and any arrangement that falls short 
of that should have been avoided. At the last minute, the Trustees 
proved unequal to the emergency, and have adopted a plan that risks 



74 The Beginnings of the Southern Railway. 

the loss to the city of the whole investment of sixteen millions. Thus 
far the management of the Trustees has been a lamentable failure, 
and whatever may be saved of the money invested will be through a 
stroke of good fortune and not through any foresight or ability on the 
part of those who represent the city in the construction of this road. 
The completion of the road to Chattanooga is in the dim future. 

The same paper spoke strongly the next day on the danger 
of losing the entire investment, and it spoke of the Common 
Carrier Company as being in a game of "heads I win; tails 
you lose. ' ' The day after that it said: ' 'There are no stock- 
holders to look after business; only taxpayers, and tax- 
payers in large cities have always proved to be the poorest 
kind of watch-dogs. ' ' It urged the city to go on with the 
road to completion at an early day, and "the disposition of it 
at a fair price. " "If properly handled, ' ' it remarked, ' 'it will, 
we believe, pay a fair return on the investment. ' ' 

The stockholders of the Cincinnati Southern Railway 
Co. met on May 22, and elected a board of thirteen direc- 
tors. The directors organized May 26, appointing Rufus 
King, President; Alfred Gaither, Vice-President, and M. C. 
Shoemaker, Secretary. 

Iyittle was heard about the company for several weeks, 
though there were hints in the newspapers that there was 
some difficulty in rinding a security on which to borrow 
money. And again the public became anxious and dis- 
trustful. A communication, signed "Manufacturer," was 
published in the Commercial on June 1 1 that gave open and 
free expression to the hostility that was gradually arising. 
The writer said: 

When nations or cities violate fundamental laws of political 
economy, they must not expect to escape punishment. When a city 
fraudulently evades a wise provision of the constitution of the state, 
it is mete that she should suffer. When non-taxpayers vote to build 
a road in another state by taxing other men's property, they must 
learn that there is no exemption for even them in the general ruin. 

Had one-quarter of the fair City of Cincinnati been consumed 
by fire, the permanent injury to the city would not have been so 
great as the building of the Southern Railroad is now almost certain 
to prove. 



Organizing the Common Carrier Company. 75 

The present year, the rate of taxation in Cincinnati will be 
largely more than three per cent. — a rate which on unproductive 
property amounts to practical confiscation. Who will buy real estate 
now except at ruinously low prices ? Were it not for the fact that 
many venturesome persons, taking advantage of the low rate of wages, 
are now improving their idle property that they cannot sell, many an 
honest, hard workingman would now be without bread. 

But have we not already suffered enough ? Can nothing be done 
to save something from the wreck of the sixteen millions ? Must we 
tamely submit and say nothing while those who have brought this 
trouble upon us now propose to saddle the road by the most ridiculous 
lease ever penned by a lawyer? Does anybody suppose that the 
present lease, once executed, will permit any competition in the 
permanent disposal of the road ? Is there anyone simple enough to 
imagine that the city will ever get, even a crumb, from the table at 
which the "Stock Yards Ring" has eaten ? 

The child is not born that will live to see the debt paid which 
was incurred by the building of this road ; neither does the mature 
man exist who will ever see the road finished to Chattanooga should 
this lease be made. 

With no completed road, where is the boasted Southern trade 
that was promised us ? 

Have we no other recourse ? Is there nothing else left us but this 
one thing — the most vicious of all leases? Yes, several things, among 
which are : 

First — Call a public meeting and request the present Trustees to 
resign, as they have at least demonstrated their incapacity. 

Second — Appoint a commission to look at the property, and ascer- 
tain the true cost of finishing the road. 

Third — To report the probable business of the road, and to ascer- 
tain the truth of the rumor that the Louisville and Nashville Railroad 
has control of most of the roads of the South, 

Fourth — To report on the expediency of leasing the road as it is 
now to a company who will agree to finish the road within one and a 
half years. By paying only a small nominal rental for a long period, 
such a company can afford to return a finished road to the city at the 
expiration of the time. 

This communication is made with a desire to injure no one, but 
by writing the truth to endeavor to save something from a most ill- 
advised speculation. 

The next day, June 12, an opinion from Hoadly, John- 
son and Colston was published, holding that the Common 
Carrier Act was unconstitutioual, in that, by reason of the 



76 The Beginnings of the Southern Railway. 

provision for a division of the net earnings between the 
Carrier Company and the Trustees, the city was virtually a 
partner with the lessee company. 

June 17 the Commercial set forth the situation as fol- 
lows : 

About three million dollars are wanting, and the Carrier Com- 
pany has not got that sum in their pockets. The Common Carriers 
can go along with the road from Cincinnati to Somerset without in- 
convenience, but they took hold with the intention of going through, 
and they desire to associate themselves with the completion and oper- 
ation of the road to Chattanooga. But they find that by the Charter 
Acts passed by Kentucky and Tennessee, the first issue of ten million 
dollars is a first mortgage on the road, and that not only the city and 
the road, but the earnings of the road, are pledged to the bondholders. 
These bonds ought to be pretty good, but it will appear at a glance 
that the existence of such bonds rather nips the prospects of the finan- 
ciers of the future. 

The Common Carriers have not even the claim of the earnings of 
the road to put into a bond to raise the three millions to finish the 
road, and at last the question is about to come before the public of Cin- 
cinnati whether they shall put in the additional millions and improve 
their property , putting it into good negotiable order before completing 
the ceremony of leasing. 

While the public was digesting this unpleasant news, 
the findings of a commission appointed by the Superior 
Court in January to make report on the compensation to be 
allowed the Trustees, were published. It found that from 
February 19, 1875, to January 1, 1877, t^ e Trustees were 
were entitled to the following sums : A. Taft, $1,000 ; John 
Schiff, $1,514; Philip Heidelbach, $2,423; W. W. Scarbor- 
ough, $1,840 ; R. M. Bishop, $6,906 ; Henry Mack, $2,949; 
Miles Greenwood, $9,333; B. A. Ferguson, $13,066. This 
was another piece of news that was not received with great 
pleasure. 

Finally came the information, on June 22, of the with- 
drawal by the syndicate of its subscription to stock of the 
Carrier Company. 

Mr. R. M. Shoemaker, acting as spokesman for the 
members of the syndicate, said : 



Organizing the Common Carrier Company. 77 

The gentlemen who subscribed the $300,000 did so with a view 
to the completion and operation of the whole line. The fact now ap- 
pears that the earnings of the road are pledged to pay the principal 
and interest upon the debt incurred by the city in building the line. 
With that fact staring them in the face, they do not feel like going on 
and bearing the whole or the most of this heavy financial burden. 
They would like to have the road earn something to pay for itself as 
they go along. Then Judge Hoadly's opinion has had a bad effect 
upon those who subscribed to the stock. A good many good lawyers 
have expressed a desire to withdraw from the company rather than 
take the chances of having to meet big assessments for lawyers' fees, 
etc. The eight gentlemen who compose the syndicate do not fancy 
the legal complications ahead of them. It is now agreed that the syn- 
dicate will withdraw their subscriptions, which will leave the stock 
subscribed about $160,000. 

About this time every stockholder of the railroad — and 
that is to say, every voter of the city — had ideas, and many 
of them were quite unpleasant. Some did not understand 
how subscriptions once made could be withdrawn ; some 
sneered at the opinion of Judge Hoadly ; others wanted to 
know why the offer of Mr. Pendleton had not been accepted ; 
some who had not subscribed a cent to the Carrier stock 
were wrathful that those who had, had overlooked the fact 
that the city itself was bound under the acts to levy a tax 
sufficient to pay the interest on the bonds and provide a 
sinking fund ; many expressed great indignation at the com- 
pensation allowed the Trustees. 

It was the eighth anniversary of the election of June, 
1869, when these things were happening and being said. 
On the very anniversary of the election the Volksblatt said : 

The Southern Railroad remains like a burr clinging to the city. 
Who is now to finish it ? The Trustees have no more money to build fur- 
ther, and the project with the Common Carrier Company can now be 
considered a failure. The pistol is again put to the taxpayers with 
the threat, money or death. The Southern monster cries for a third 
and large crumb. 

The Enquirer said : 

The Southern Railroad is costing the city of Cincinnati $4,000 a 
day. Quite a nice thing to contemplate. 



78 The Beginnings of the Southern Railway. 

The Gazette said, on June 25 : 

It is now plain that the city must furnish the means to complete 
the road before the road can be permanently leased, and it is just as 
plain that the Board of Trustees must be reorganized before anything 
further will be done in that direction. If the Trustees are not able, 
after spending sixteen millions of money, to utilize one mile of the 
road upon which that money has been spent, the time has come when 
the responsible parties should step down and out. A want of confi- 
dence is plainly written upon the countenance of our taxpayers. 

The anniversary contribution of the Commercial came 
on June 28. It said. : 

We do not like the appearances. The coming call for money, 
under the policy that is being allowed, means the greatest general ex- 
citement and disturbance ever experienced in Cincinnati. Cannot the 
road be leased to railroad men who will finish and operate it ? Cannot 
this be done, and Cincinnati saved from further calls ? Cannot all the 
railroad interests of Cincinnati be saved in this way ? We must come 
to short-arm conversation 011 this subject. The stagnation endured 
for six weeks is insupportable. 

After the withdrawal of the syndicate subscriptions, 
and others, the Directors voted, on June 25, that the books 
should be reopened until the amount of $230,000, including 
the uncanceled subscriptions, should be taken. By June 
30 the deficiency was "nearly made up," and it was agreed 
to go on and contract with the Trustees on the terms already 
provided. Such contract was signed July 3. 

The day before it was signed, a communication ap- 
peared in the Commercial, over the well-known initials 
" T. J. B.", in which the views already expressed by "Man- 
ufacturer" were reiterated. " T. J. B." said: 

With sixteen millions embarked in a disastrous enterprise, it be- 
hooves every citizen to use his best endeavors to save something from 
the threatened ruin. 

It is plain to every one that an unfinished road will hardly pay 
running expenses, will bring but a trifling trade to the city, and will 
cause the total loss of $16,000,000. 

Our only hope, therefore, is to procure the immediate completion 
of the road. Why encumber this vast property with a lease to parties 
who propose investing the trifling pittance of $250,000? 



Organizing the Common Carrier Company. 79 

This Tease ouce executed, most of us may say farewell Chat- 
tanooga ; life is too short for us to hope to see thee united to Cin- 
cinnati. 

In view of the almost certain loss of our great investment, the 
writer, who has always opposed the building of the road by the city, 
is willing to vote for two millions more provided we have the assur- 
ance of a reliable commission that the above amount will complete the 
road. Should it appear that four or five millions will be required, let 
us stop where we are, and transfer the property for a number of years 
to parties who will finish the road without delay. Let us not commit 
the unpardonable blunder of saddling the road with a lease for a 
"mess of pottage." 

We can afford to make no more mistakes. The prosperity of our 
city is already seriously injured. Another year, and we shall be dis- 
graced by efforts to repudiate a debt almost unendurable. 

The Enquirer of the same date said of the lease: 

It is like the partnership between some husbands and their wives 
in which the husband invests all the money and owes all the debts, 
and the wife owns all the property and takes all the profits. And it is 
important to note that the city is the unfortunate husband. 

The agreement which was signed between the Trustees 
and the Cincinnati Southern Railway Co. the day after the 
publication of these articles, provided for an operating li- 
cense, to continue until sixty days after the making of a 
contract for the completion and leasing of the whole line; or 
in case such contract were not made within one year, then 
either Trustees or company had the right to terminate the 
license on six months' notice. It was also provided that 
the operating company should be reimbursed for its engines, 
rolling stock and other personal property by its successor. 
The freight and passenger rates were to be agreed upon be- 
tween the Trustees and the company, and arbitration was 
provided for in case of disagreement. 

Under this agreement, or license, the road was opened 
for regular passenger traffic on July 23, 1877, and for 
freight trains on August 13. Mr. Rufus King resigned as 
President, September 1, and was succeeded by Mr. W. H. 
Clement. Mr. Gaither was succeeded as Vice-President on 



80 The Beginnings of the Southern Railway. 

July 20 by Mr. R. M. Shoemaker. The Board of Directors 
was composed of Rufus King, Robert Mitchell, J. H. 
Rogers, R. M. Shoemaker, Henry Iyewis, W. H. Clement, 
David Sin ton, Preserved Smith, William Glenn, J. N. Kin- 
ney, Alfred Gaither, J. L,. Keck, and J. H. Rhodes. 



Getting Ready for Two Millions More. 81 

XIII. 

GETTING READY FOR TWO MIIJJONS MORE. 

While the negotiations which at last led to the licensing 
agreement were in progress it was published in the news- 
papers that there was serious disagreement between the 
Trustees. Interviews with Mr. Schiff and Mr. Mack were 
published on June 28, and in the course of a few days Mr. 
Bishop and Mr. Greenwood spoke for publication. It de- 
veloped that Mr. Ferguson and Mr. Schiff were standing 
together, with the other members of the Board against 
them. The immediate occasion of the outbreak seemed to 
be the report of the commission on the compensation to be 
allowed the Trustees. In the report each member of the 
Board had been allowed $1,200 a year as regular salary, 
and further allowances had been made for "special services." 
The difference between the allowances caused some irrita- 
tion, and the voters of the city were soon put in possession 
of all the material facts. 

One fact was brought out in the course of the public 
interchange of observations that was not soon forgotten. 
Mr. Mack was reported as saying: 

The estimates of Mr. Lovett, in December, 1875, were not reduced, 
but he had only to estimate the part of the cost which the real build- 
ing of the road covered. Of the cost for the right of way, for which 
still $500,000 must be paid, the surveys, the depots, office expenses, 
etc., the estimate laid before the public contained nothing. Mr. 
Lovett had estimated these further expenditures which were not 
given in his estimate at about three millions, and this was not given 
to the public. The estimate laid before the public was, without 
question, not drawn up in good faith, for nothing was said of the fact 
that a further sum of from three to five millions would be necessary, 
although this was known. It is my unqualified opinion that instead 
of six millions at least eight millions ought to have been asked for. 
I will not here say whose fault it was that this was not done. But 
you know just as well as I who drew the bill and who mainly 



82 The Beginnings of the Southern Railway. 

carried through its adoption. Nothing is left except to ask for a 
further appropriation. Ferguson's idea that soon we will lease the 
road I do not consider very practicable. 

Mr. Ferguson declined to make any further reply than 
to say "nobody believes the charges;" but in one way and 
another they were kept quite conspicuously before the 
voters for three weeks, when for a time interest in them 
ceased. 

When the Carrier Company agreement was signed Mr. 
Ferguson applied himself to drawing up the form of a 
1 'completing and leasing' ' agreement. In a long communi- 
cation printed in the Commercial, on June 30, Mr. Erasmus 
Gest had expressed the opinion that " it would have been 
far better for the city to give a very liberal bonus, say three 
millions, to a responsible company to build the road," than 
to grant a license to the Carrier Company; and he added, 
"I think the Trustees should advertise at once for proposals 
to complete and lease. ' ' This the city had the right under 
the Act of April 24 to do, and this was the work on which, 
as he afterwards testified, Mr. Ferguson was engaged when 
the great railroad strikes of July, 1877, broke out. These 
strikes lasted two weeks, occasioned the loss of millions of 
dollars worth of property, and thoroughly unsettled con- 
fidence in railroad securities, which for the first time since 
the panic of 1873 was becoming re-established. "I had 
drafted the preamble and the first few sections," Mr. Fergu- 
son said to the Investigating Committee, "when the great 
railway strike killed confidence in all railroads; I folded 
my papers up until confidence began to be restored," and 
it was not until December 4 that the first draft of a con- 
tract was submitted. 

Meantime Mr. Bishop received the Democratic nomina- 
tion for Governor. The growing feeling against the 
Trustees found expression in an editorial in the Gazette, dis- 
cussing Mr. Bishop's strength in Hamilton County. That 
paper said: 

The Trustees, after years of studied misrepresentation, having 



Getting Ready f 07" Two Millions More. 83 

spent the 510,000,000, asked for an additional appropriation of 
$6, 000,000. We favored the finishing of the road, but suggested to 
the Legislature that the Trustees having forfeited public confidence 
should be removed and a new Board, in whole or in part, be ap- 
pointed. This was not acted upon however. Mr. Bishop, in urging 
the passage of the bill at Columbus, said $5,000,000 would answer, but 
the Trustees asked $6,000,000 in order to make it a sure thing. Of 
course no more would be spent than necessary. The estimate of 
Colonel Lovett was also presented to the Legislature, putting the 
additional cost of finishing the road inside of six millions. That re- 
port was doctored by the Trustees in order to make it appear that 
the six millions asked for would be sufficient when the Trustees, in- 
cluding Mr. Bishop, knew better. 

Now, the sixteen millions placed in the hands of the Trustees by 
a confiding people are spent, or contracted to be spent. The bridge 
and approaches are not finished. One hundred and sixty miles of 
road from the Ohio river to the South are running. Iron, sufficient to 
lay one hundred miles of track is in hand, and paid for at a cost of 
$25 per ton more than it could be put down for to-day, but there is no 
money to put it down, and not one mile of road between Somerset and 
Chattanooga can be made available until the city makes a further offer 
of three millions or more. 

Bear in mind that the cost of labor and material declined every 
month from the time the construction of the road began; all the work 
was paid for in cash, and yet a road that the Trustees assured the pub- 
lic, with ample data before them, would be built for ten millions, and 
again for sixteen millions, will cost when finished, nineteen millions. 
Sixteen millions is already gone, and is drawing interest without any 
return. 

It will thus be seen that the people of Cincinnati have been 
greatly deceived, and are now greatly burdened as the result of the 
mismanagement of the Trustees. In the face of this, the Trustees not 
only draw liberal salaries, but claim additional compensation for their 
services. 

It is known that it has been seriously proposed to impeach the 
three Trustees who are responsible, as one way to get them out of the 
office they hold, and that there will be a determined effort next winter 
to reorganize the Board of Trustees, in order that the final disposition 
of the property may be placed in the hands of men who have the con- 
fidence of the taxpayers. 

Some weeks after the publication of this article, Mr. 
Bishop was elected Governor, and a Democratic Legislature 
was chosen. On October 17, 1877, the first quarterly re- 



84 The Beginnings of the Southern Railway. 

port of the Common Carrier Company was made. There 
was turned over to the Trustees, as their share of the earn- 
ings, under the leasing agreement, $32 ,123.65. The Gazette 
said the next day in a double-leaded editorial: 

When the running of the road was undertaken, it was considered 
doubtful whether the net earnings would pay interest on the capital 
invested in the Common Carrier Company, but it has paid that interest 
and fifteen per cent, beside. Of course this road has brought, and 
will continue to bring, new business to Cincinnati. This was the 
objective point in building it. The city did not expect to make 
money. It expected to lose, and the only question was how much 
would be sunk. It now seems probable that it may lose nothing, and 
that the line will pay back the entire cost of construction. It has 
been persistently asserted that the road would not pay running ex- 
penses. We shall hear no more of this. 

Further comments were made by the same paper a few 
days later. It said: 

The Southern road is an enterprise that few favored except as 
a means necessary to build up and extend the business of the city. 
We have spoken of the net earnings of the road, but if there were no 
net earnings — if the city had to pay the interest on the cost of con- 
struction forever, it would be a good investment. 

It also remarked in its local column that "the South- 
ern Railroad anaconda had taken McL,ean avenue, and now 
wants Lincoln Park. 

The showing made by the Carrier Company was not 
favorably received by the Enquirer. That paper said, in 
its issue of October 19: 

Charging the cost of maintenance at $166 per mile, we find the 
sum of $27,390 should be deducted from the $32,000. Besides interest 
on city bonds amounts to not less than $80,000 — apparent loss $75,000. 
The Enquirer has been a consistent advocate of the Southern Rail- 
road, and we hope the predictions of its projectors may all come true, 
but they must be proven before they can be admitted, and we regret 
to find the proof so far quite insufficient. 

It was about this time it developed that the Sinking 
Fund Trustees, a board that had come into existence the 
previous April, were not satisfied with the reports and state- 
ments they were receiving from the Railroad Trustees. 



Getting Ready for Two Millions More. 85 

The reports were officially asserted by Mr. Aaron F. Perry, 
a member of the Sinking Fund Board, to be ''far from satis- 
factory." 

Moreover, the opposition of the Volksblatt became 
stronger than ever. In the latter part of November that 
paper said: 

The University Board has resolved not to invest in city bonds, but 
in United States notes. The Young Men's Mercantile Library Asso- 
ciation has refused, and other corporations. Guardians and adminis- 
trators would least of all venture such a hazardous investment. 

We consider these Southern Railroad Bonds as the most crying 
abuse of the powers of taxation of which any American municipal 
government has ever been guilty. We consider them as a great 
wrong toward taxpayers, and a direct robbery of the minority. Every 
one who believes that his rights have been infringed upon has the right 
to call upon the courts against the crushing and unjust burdens im- 
posed upon the city under false pretenses, and in an unjustifiable man- 
ner. The struggle against injustice and wrong is not only a right but 
a duty to all those who have to suffer under it. 

Our programme is in three parts : 

1. We shall oppose any further issue of Southern Railroad bonds. 

2. We shall test the legality and constitutionality of the six 
million act. 

3. The original Ferguson law was tested by a solicitor who did 
not wish to hinder but help the bonds. We are in favor of bringing 
the suit again before the Supreme Court, and we hope to obtain its 
entire overthrow. 

The holders of the ten million bonds have another security be- 
sides the unlawful responsibility of the city. These bonds are a mort- 
gage on the road itself. We are in favor of transferring the road to 
them for their mortgage. 

"Warfare on the bonds," the Conunercial said, " is in- 
fernal nonsense ; if the city should repudiate them, it would 
not be a fit place for an honest man to live in. ' ' 

Nevertheless, the ugly word had been spoken. Many 
and many a time during the next year it was to be heard, 
and the purpose proclaimed, directly now by a very influen- 
tial paper, was to be carried out. As will be seen, an attack 
was made on the bonds, on every issue, and it was backed 
up by a Citizens' Association behind which was money, in- 



$6 The Beginnings of the Southern Railway. 

fluence and ability. What a contrast it was to that "unan- 
imity which we have rarely seen equaled," that was the 
inspiration of the moment in 1869 ! 

The year of 1877 ended with the publication of the 
completing and leasing plan of Mr. Ferguson, the one which 
had been laid away on the breaking out of the railroad riots 
of July. 

The Commercial said of it : 

We believe the time not far distant when the road will be finished 
without calling upon the people of Cincinnati for more bonds. The 
experience of the Common Carrier Company has demonstrated the 
value of the road. It seems quite probable that if the Carrier Com- 
pany had known as much at the beginning as they do now, they would 
have entered into a contract to finish the road. One million, or one 
million and a quarter, or at most one million and a half, carefully 
placed, would give our locomotives a clear track from McLean avenue 
to Chattanooga. 

On the other hand, the Enquirer said : 

At length the egg upon the incubation of which the legal mind 
of the Board of Trustees of the Southern Railroad has been so long 
engaged, has given away to the bigness within, and the bantling is, 
with a great amount of clucking and ruffling of feathers, trotted out 
for public inspection. The public has been frequently informed dur- 
ing the past few months that Mr. Ferguson, as a special committee of 
the Trustees of the Southern Railroad, was carefully and laboriously 
engaged upon a form of permanent lease for the road, under which its 
completion would be assured without further expenditure to the tax- 
payers of the city. This article, or one purporting to have such hidden 
power, was yesterday presented to the Trustees. That it is hardly the 
thing expected will be readily observed, and that all its provisions are 
hardly such as Cincinnati can afford to accept in order to avoid the 
payment of another million to complete the road, will probably be the 
conclusion of the taxpayers. In point of fact, its provisions, except 
in so far as they provide a snug life-berth for the Trustees at a good 
round salary at the city's expense, and give up our streets and public 
property to such company as may take the line, are nit. 

A new legislature, with a Democratic majority, was 
about assembling, and Mr. Bishop was about to take his 
seat as Governor. The Enquirer referred to the ' ' rumbling 
of the Legislative Vesuvius ' ' as having ' ' unsettled the pur- 
pose to apply for more money." It said : 



Getting Ready for Two Millions More. 87 

Coupled with a bill for the extra money to finish the Southern 
Railroad, let us have a new Board, — thanking and excusing the past 
Trustees. They have been working so hard and so long, they must be 
tired. 

It remarked one day : 

Governor Bishop acts as if he would hold to both offices, South- 
ern Railroad Trustee and Governor. The old gent wants all the 
honors. 

Mr. Ferguson's plan for completing and leasing was, in 
accordance with the fourth section of the act of April 18, 
1873, submitted to public inspection, and a time and place 
were appointed for meetings of citizens and Trustees. Two 
such meetings were held, but very few citizens being pres- 
ent, and fewer at the second meeting than at the first. At 
one of these meetings Mr. Ferguson expressed the view that 
" if the building of the road was not a mistake, — and I be- 
lieve it was not, — there was no necessity of attempting to 
control it in the interest of the city any more than it would 
naturally control itself that way." 

"How would it do," the Gazette asked one day, " to 
make "the Sinking Fund Commissioners a second Board, 
without compensation, and with the veto power, in the 
management of the Southern Railroad trust ? Will the 
Little Legislature turn this suggestion over in their minds ?' ' 

And so another year closed — with the declared inten- 
tion of testing all the bond issues on the part of one party 
of citizens ; with another part openly hostile to the Trustees, 
though in favor of going on with the road ; and with Mr. 
Ferguson's plan of completing and leasing the road coldly 
looked upon and treated with scant courtesy. The Common 
Carrier Company was doing much better than had been ex- 
pected. It was evident that the coming year was to be an 
eventful one. 



88 The Beginnings of the Southern Railway. 

XIV. 
THK CRITICAL YKAR OF 1878. 

It does not appear to be necessary to go into all the de- 
tails of the conflict of views, interests and plans that oc- 
curred in 1878. A word that was used in one of the 
editorials of the time — maelstrom — quite well describes the 
whirlpool of opinions and turmoil of policies of that event- 
ful and critical year. In a communication to one of the 
daily papers, Judge Dickson said: 

It is patent now to all men that the city is incompetent for the 
management of the road. The people vote one way, then another; 
everybody is in control and responsibility nowhere. The Chamber of 
Commerce, the Board of Trade, the Trustees, and the newspapers and 
each citizen — all, all control. Meanwhile the road is washing away; 
no income; outgo daily, $4,000. 

This is not an unfair, or inaccurate characterization of 
the period. Nevertheless, as one looks back now over the 
history of those dark days, it is plainly seen that all the 
contending elements and forces can be resolved into four 
classes: 

1. Those who believed the whole scheme of a South- 
ern Railroad was a gross abuse of the taxing power. The 
Volksblatt spoke for this class. 

2. Those who believed in building the road but 
thought the Trustees guilty of deception and bad manage- 
ment. The Enquirer and Gazette spoke for this class. 

3. Those who believed in Mr. Ferguson and his com- 
pleting and leasing plan. The Commercial spoke for this 
class. 

4. Those who were generally dissatisfied on account 
of the burden of the road and the management of the Trus- 
tees, and because Council had no voice in that management 
or control. The Times spoke for that class. 

Behind the Volksblatt was a large German vote. Be- 
hind the Gazette and Enquirer were the Chamber of Com- 



The Critical Year of 1878. 89 

merce, the Board of Trade, and many prominent business 
men. Behind the Commercial was Mr. Ferguson. Behind 
the Times was an influential political following. 

It is also to be said that in the Board of Trustees, Mr. 
Ferguson stood by himself, especially during July, when, 
under the completing and leasing proposition, the Stone and 
Chamberlain bids were under consideration. 

Besides these four general divergent and conflicting 
views, there were differing views in the Chamber of Com- 
merce and the Board of Trade; and Hamilton county mem- 
bers of the General Assembly had their opinions also which 
had to be taken into account and reckoned with. The 
Mayor, also, had opinions, and they were promulgated with 
the executive authority behind them. It was a "mael- 
strom" indeed. 

All the ins and outs of the conflict and clashing of 
opinion and interest which followed need not be dwelt upon. 
It was marked by what Senator Lord called "a bitterness 
and excitement" that Cincinnati had not hitherto known. 
A few quotations from many must suffice to give an account 
of the darkest and most critical period in the history of the 
Southern Railroad. 

The year had scarcely begun when the Volksblatt — on 
January 2, 1868 — expressed its opinion in this forcible way 
of the completing and leasing plan by which Mr. Ferguson 
had set so much store: 

It is a bungling piece of work. It has in view one of the worst 
tricks that the Trustees have ever played on the city. Such a con- 
tract would be injurious and dangerous to the interests of the city; it 
would, in a word, form a fit keystone to the long series of wrongs, the 
unfairness, the false representations, the broken promises, the de- 
lusions of which the Trustees have been guilty toward citizens. 

A little later, Mr. S. Lester Taylor said contemptuously 
in the Chamber of Commerce as to this plan: 

Mr. Ferguson said recently that if something or other had not 
been omitted from the Wright Bill the road would have been finished 
long ago, and would now be in successful operation. Such talk 
was simply nonsense — the mere wild talk of a visionary. 



9 o 



The Beginnings of the Southern Railway. 



The views of the Gazette were in the same line. It 
said: 

The claims of the Trustees that if all the legislation asked for by 
them had been granted, especially the Common Carrier Bill, the road 
would have been leased long ago by a company that would finish it, 
is all bosh. It is a very childish excuse, too, for the delay that has 
been experienced and the blunders that have been committed. 

The Commercial said: 
Just now we are not able to see that there would be much gained 
by interfering with Mr. Ferguson's plans and purposes. The mischief, 
whatever it is, is done. We have spent sixteen millions of dollars, 
and we should have had a road if it had not been for sundry eccentric 
displays 'of wisdom at Columbus. Mr. Ferguson has a policy, and 
perhaps it should be developed. He has given the Southern Road 
more thought than any other man has bestowed upon it. Now, give 
him a chance to get us out of the scrape in good shape. If he cannot 
do it, and will not quit, we can have him impeached and thrown out. 

But as it was well understood, and charged by every 
other newspaper in the city/ that the Commercial was Mr. 
Ferguson's organ, this plea that the completing and leasing 
plan should have a trial was little thought of. The posi- 
tion of the Volksblatt was generally approved. 

The Volksblatt took early occasion also to renew its 
declaration against the issue of more bonds. It said on 
February 13: 

We repeat our notice to the Cincinnati Southern Railroad Trustees 
and members of the Legislature. Every future bond issue will be re- 
garded as illegal and worthless and will finally not be paid. The cup 
is full. The people of Cincinnati will not put up with any further ex- 
tortion of this sort. 

Again, on February 24, the Volksblatt said: 
We protest against the proposed increase of our city debt for 
Southern Railroad purposes. The bonds, the authorization of which 
is now demanded by the Trustees, could not be sold, or if so, could 
only be sold at an enormous sacrifice, because the purchasers would 
have to take them with notice of the risk of final non-payment. The 
opponents of such a crying abuse of the taxing power will not tamely 
submit to fresh exactions. They deny the legal and moral right of 
the City of Cincinnati to tax them for a railroad running through 
Kentucky and Tennessee. They claim that every dollar of bonded 



The Critical Year of 1878. 9 1 

indebtedness issued over and above the ten millions covered by the 
original law has been issued wrongfully and should not be paid. They 
will resist the payment of both principal and interest of the new 
bonds, the authorization of which is now demanded, and they will be 
supported in this position by a very large and respectable number of 
citizens, including probably seven-tenths of the real estate interests of 
the city. 

About this time the Chamber of Commerce began to 
discuss the matter of a bill authorizing an additional loan 
of two millions. At one of the Committee meetings Mr. 
Aaron F. Perry, one of the Sinking Fund Trustees, made 
this significant remark: "The city is in the position of an 
insolvent." The Gazette said: 

It is to the discredit of the Trustees that the road was not opened 
to Chattanooga at a cost not exceeding the sixteen millions already 
voted, as it might have been. The Trustees not only missed their 
opportunity in not pushing the road through, but they forfeited the 
confidence of the people. They represented very positively that the 
additional six millions asked would finish the road, and upon that 
representation it was granted. Otherwise it would not have been. 
The Trustees have not dealt candidly with the people. On 'the con- 
trary, they have either through ignorance or design deceived the tax- 
payers. 

The same paper said a few days later, February 18: 
The blind jumps of the Trustees have cost the city a great deal of 
money. It is now nine years since the Trustees commenced drawing 
salaries, and the road is not near finished. 

The Times said in its issue of February 4: 
We believe that the city is remorseful that it ever went into the 
business of building railways, and that the great majority of honest 
opinion is in favor of getting the road off of our hands now, and at 
the best terms that can be obtained. 

In the same paper, on February 19, appeared a com- 
munication from Judge Dickson, He quoted a remark 
which he attributed to Mr. Ingalls, "People entered into 
this matter with less care than they take in making an in- 
vestment of $10,000," and then said: 

Certainly when everybody was shouting ten million dollars and 
the road, everybody knew absolutely nothing about it. They know 



92 The Beginnings of the Southern Railway. 

nothing now when they say two millions will finish it. Indeed at 
that time ignorance was the prime qualification for a Trustee. A 
sharp lawyer, a respectable grocer, a retired clothier, a retired banker 
and a retired manufacturer of iron tools, under the lead of a news- 
paper publisher and a bung-hole corker, undertook to build a great 
railroad, crossing mighty rivers and mountain ranges, three hundred 
or four hundres miles long — did ever a city commit such an act of 
folly? 

The views of the Enquirer, repeatedly expressed, were 
nowhere better, or more fully, set forth than in a lengthy- 
editorial on March 18. The paper represented the dominant 
party in the General Assembly. It said: 

The Ohio General Assembly is entreated for legislation touching 
the Cincinnati Southern Railroad. There are parties in Columbus, and 
not in Columbus, who are clamoring for the glory of Cincinnati, and 
for an appropriation. This session of the Legislature will not close 
without some additional law-making upon the subject which is of the 
very first importance to the taxpayers of this city. What shall that 
legislation be? It is plain, in the first place, that any legislation should 
look to the completion of the road, which has already had shoveled 
sixteen millions of dollars into it, and which is looking with faith alone, 
for a return on the investment. Any additional legislation should look 
to the ownership of the road by the city. Future ownership should 
not contemplate the ownership by the Trustees of the road who have 
deceived the people, kept secret their conduct, and forfeited public 
confidence. The road should belong to the people of Cincinnati, and 
not to these Trustees. In the next place, no short-sighted exaspera- 
tion at the past conduct of the enterprise should enrage the city into 
throwing away the costly property so nearly completed, or drive Cin- 
cinnati into the abandonment of the franchises secured, the invest- 
ments made, the millions temporarily buried to the greed of the city's 
agents, who regard themselves as employed by the other side, or to the 
avarice of their friends. The people of Cincinnati beg the Legislature 
to remember that the Cincinnati Southern Railroad is not the property 
of one Trustee, or even of three or four Trustees, but of Cincinnati; 
and, to speak more plainly, the taxpayers of this city ask protection 
at the hands of the Legislature from certain of the Trustees of this 
road who cling to their places with a suspicious tenacity, who insist 
that they have a life office, who act as if they owned the road. The 
present management of the road has lost the confidence of the com- 
munity. The chief of the Trustees has openly and often avowed 
that he was the Trustee of the holders of the Southern Railroad 
bonds ; and if his theory be correct, the city appears without any 



The Critical Year of i8y8. 93 

Trustee, or advocate, and it needs one. As the] head and first of the 
Board of Trustees confesses that he is not acting for the city, but for 
the creditors of the city, Cincinnati makes some requests of their 
Legislature. 

1. The people of this city, while willing to be taxed to complete 
the Southern Railroad, ask the General Assembly not to permit the 
issue of another bond on account of this road until there shall have 
been a thorough investigation of the past conduct of the Board of 
Trustees. There are the very gravest charges preferred against the 
present management. It has deceived the people grossly. It lied, to 
begin with, as to the cost of the road. It lied again when the six 
millions were requested. It has remorselessly passed a "plan," noto- 
riously not conceived for the sole purpose of obtaining railroad com- 
munication with the South. Before the people of Cincinnati pay 
another dollar to these Trustees, they claim the right to ask where 
these sixteen millions have gone. Neither the Legislature nor the 
Trustees dare refuse this reasonable request. The refusal would be a 
confession of guilt on the part of the Trustees, in which the General 
Assembly cannot afford to be a partner. 

2. The giving of the power to lease this road is almost equiva- 
lent to giving the power to sell it — almost equal to a conveyance of the 
road. The taxpa3*ers are not willing to leave this property, for which 
they have paid eighteen to twenty millions of dollars, in the hands of 
this management with absolute power. The action of the Legislature 
in adding two millions more to our Southern Railroad debt must be in 
conformity with the wishes of this city if it is to be made effective. 
It would not be wise for the Legislature to attempt to force a debt 
upon this city against her will, or upon conditions obnoxious to her 
people. 

It is only reasonable to ask that the power to dispose of this road 
at their pleasure be taken from these men, and that before the city 
gives these persons two millions more, they be permitted to know 
what has become of the sixteen millions gone. If the road is built for 
the city, as well as by the city, and not for these individual Trustees, 
these two requests will be granted the city. 

This article was read in the Senate at Columbus and 
made a deep impression. The distrust of the Trustees, 
which nearly every line of it shows, fairly reflected the 
popular judgment. Thus, Mr. Taylor said, in the citizens' 
meeting called to consider the terms of a new bill: " There 
is a wide-spread public distrust which must be recognized 
in future legislation touching this Board." Mr. Sinton 



94 The Beginnings of the Southern Railway. 

wanted the Board removed, he wanted their salaries re- 
duced, and did not think it was right that one man should 
do all the work and the rest draw salaries. Governor Bishop 
came in for sharp criticism for drawing salaries as Governor 
and Trustee. The evidence of public irritability was seen 
and heard on all sides. ' ' We ought to bear with the 
Trustees," said Mr. Shoemaker; but the temper of the 
people turned, deafened ears to his appeal. The Com?ner- 
cial said : 

Whatever may happen to others, the success or failure of the road 
makes or wrecks Ferguson. His name will be identified with the road 
not only in this but in coming generations. No other man can be 
found under such obligations to give his best intelligence and energies 
to the work. We are not in favor of turning upon him and delivering 
him to his enemies- He got us into this scrape, and we want him to 
get us out of it. 

But Mr. Ferguson's scalp was the one most wanted. 
The Gazette said: 

Mr. Rowland fairly expressed public sentiment when he said that 
the ten commandments would be voted down if proposed by the Trus- 
tees. Mr. Ferguson may butt his head against public sentiment; he 
may antagonize the forthcoming law; he may get himself into big 
trouble; but the people will have the road, and because of this deter- 
mination they will insist upon restrictions and conditions, and if Mr. 
Ferguson does not behave himself or resign, his impeachment will be 
moved and in deep earnestness. 

The Commercial said on March 22: 

Shall we or shall we not finish the road? The repudiating ele- 
ment has made itself understood in this connection, but the people of 
Cincinnati have not come to that. There will be no repudiation of the 
Southern Railroad debt. 

It is not pleasant reading now, even this repudiation of 
repudiation; not pleasant to know that such necessity ever 
was for such rebuke. But it is a part of the history of the 
Southern Railroad and those times. 

Out of the turmoil and bitterness, two bills presently 
emerged. One was introduced by Senator H. C. L,ord, in 
behalf of the Trustees. It simply authorized an additional 



The Critical Year of 1878. 95 

loan of two million dollars, no provision being made for a 
popular vote. It hardly received ordinary senatorial courtesy. 

The other bill was known as the Chamber of Commerce 
Bill. It had the indorsement of the Board of Trade, of 
many business men, and, it was publicly stated, of all the 
Trustees except Mr. Ferguson. It was adopted by the 
legislature in substantially the form in which it was pre- 
sented. Its provisions show more clearly than newspaper 
editorials or communications or discussions on 'Change or 
elsewhere what public opinion was in those days. 

It provided in brief for a loan of two millions, under 
the following conditions: No part of this sum was to be 
used for terminal facilities, until after the road had been 
fully completed, and then a sum not to exceed $50,000 for 
such facilities, this sum to be expended only on the ap- 
proval of the Sinking Fund Trustees; no bonds were to be 
issued unless authorized by a popular vote; the aggregate 
salaries of the Trustees were not to be beyond $5,000 per 
annum; the approval of the Sinking Fund Trustees was re- 
quired for the execution of any lease, for either part or 
whole of the railway; the consent of the Board of Public 
Works was required for the use or occupancy of any street 
or public space; and finally, the cost of leaseholds to be ac- 
quired for terminal facilities should not exceed $6,000 per 
annum, the approval of the Sinking Fund Trustees being 
again required. "The overwhelming public distrust" 
which the Gazette had spoken of is shown in every line of 
the bill. Still it was not entirely satisfactory, because it 
contained no provision for the removal of, or change in, the 
Board of Trustees. Uncertainty as to the power of the 
General Assembly to remove appears to have been the 
reason for the omission of this provision. Otherwise the 
bill was satisfactory to those who were strongly opposed to 
the "bad management" of the Board, and yet in favor of 
going on with the work. 

The Commercial said one day: "We have found Mr. 
Ferguson's argument as to terminal facilities very strong." 



The Beginnings of the Southern Railway. 

It was like flaunting a red flag in the face of a bull. Ter- 
minal facilities were spoken of as brass ornaments, and as 
uncalled for extravagancies. What the people wanted was 
a completed road to Chattanooga over which cars could be 
run — other things would come in time. The fact was they 
were becoming tired and worn out with the heavy burden 
that was costing them nearly $4,000 a day. little things, 
fretted, such as the salaries paid the Trustees. Pictures of 
the Trustees' car — the "palatial car" of the Trustees as it 
was called — were printed and circulated as evidence of ex- 
travagance. 

Mr. John SchifT, one of the members of the Board, had 
died on February 9, and on February 14 Mr. A. H. Bugher 
had been appointed in his stead. The Commercial said: 

A double-headed board is an admirable contrivance to do noth- 
ing, and probably would result in compelling the Trustees to run the 
road, for Messrs. Longsworth, Seasongood, Thorne, Aaron F. Perry, 
and J. W. Laws would not agree with Greenwood, Ferguson, Bishop, 
Mack and Bugher on the terms and conditions of a lease if there was 
a chance of disagreement in forty years by the town-clock. 

' ' So much the worse for the Trustees and so much the 
better for the city," was the angry comment. 

"The streets are disgracefully ragged and in many 
places dangerous," a paper said; and "the city was in 
horrid gloom last night ; the moonlight was due, but the sky 
was overcast and the city hideous. ' ' Men put over against 
this the total allowance paid the three Trustees from the 
beginning, — Ferguson, $38,066.66; Greenwood, $32,333.83; 
Bishop, $16,999.66, — and expressed the opinion that it was 
not strange the streets were going to pieces and the city 
running without light. 

The Enquirer said, on April 8 : 

An investigation ; another management ; the speedy and cheap 
completion of the road; 110 more of that "plan;" no more costly 
"terminal facilities" and real estate speculations at present ; no final 
disposition of the road in a depressed market before its value is tested, 
these are the essential features of the Southern Railroad policy desired 
by the people of Cincinnati. 



The Critical Year of 1878. 97 

On April 12 Mayor Moore's annual message was pub- 
lished. He said : 

The Southern Railroad is the principal cause of our very exor- 
bitant taxes, under the load of which we are now suffering, and unless 
we obtain relief from some source, it is very problematical if in the 
very near future Cincinnati will be classed as one of the solid financial 
cities of the country, as it now is. Excessive taxation prevents enter- 
prise and an influx of population, which, with the manufacturing and 
commercial interests already here, will seek other and more favorable 
locations. What has been done cannot be undone. The bonds issued 
already and the interest thereon will have to be promptly met. The 
talk of repudiation cannot be tolerated. 

In a lengthy discussion, Mayor Moore suggested the 
sale of various city properties, including the water-works, 
wharves, parks, and the Southern Railroad. His estimate 
was that the latter property could be sold for ten million 
dollars ; the balance he would let go. 

In Columbus, the two bills brought on a discussion 
which was not less bitter than that raging in the city. It 
was thought at first that a bill might be agreed upon under 
which the question of authorizing the additional loan could 
be submitted at the April election. That idea was soon 
abandoned. The attacks on the Trustees were renewed 
with increased vigor in the halls of the General Assembly. 
It was charged that the Trustees had sold bonds at ninety 
cents on the dollar, and that $25,000 had been diverted from 
King's Mountain Tunnel work and used to buy the votes in 
the Ohio Legislature which were needed to put through the 
six million dollar loan two years before. This charge and 
other charges against the Trustees, as well as the popular 
demand in Cincinnati, led to the appointment of two com- 
mittees of investigation — one, to examine into the charges 
affecting the members of the General Assembly which 
passed the six million bill ; the other, to make a thorough 
investigation of the conduct of the Trustees in reference to 
their trust. The former committee was appointed at once 
and speedily began its work. The other committee, it was 



98 The Beginnings of the Southern Railway. 

provided, was to be appointed by the Trustees of the Sink- 
ing Fund and the Board of Public Works. 

On April 18 the bill was passed whose provisions have 
been already set forth. The election was to take place on 
May 3. 

The Volksblatt said the next morning : 

If the Legislature had given us an opportunity to vote for new- 
Trustees, the two millions would probably have been appropriated, but 
the people of Cincinnati will not trust two cents to these Trustees, to 
say nothing of two million dollars. 

' ' It was treason once, ' ' said the Commercial ', on April 
23, "to even question the seductive plan of building rail- 
roads by municipal corporations. Now, alas ! somewhat 
late, there is a reaction. Criticism is everybody's privilege. 
It has not charged more than misfortune and error of judg- 
ment." 

Five days later the same paper said: 

If we were to go back we could name many ought-not-to-have 
heens, perhaps none more earnestly than that the city ought not to 
have gone into railroad building at all. It ought to have been fought 
out on that line on the first proposition. 

On the 28th of April the Commercial published many 
short interviews with prominent citizens. Among them 
was one with Mr. J. J. Kmery. "I shall vote against the 
two millions," Mr. Emery said; "there will be organiza- 
tion; we will have headquarters and will issue circulars, 
and have the necessary work done." "It is certainly a 
very peculiar circumstance," said the Commercial, "that 
there are men now prominently advocating the affirmative 
side of the bond question who have been hostile to the 
project on principle, and others who were in favor of it on 
principle who are now positively opposed on account of 
policy." 

Two days before the election the Enquirer said: 
Kvery instinct of business sagacity and of plainest economy 
should prompt the electors of the city to vote ' ' yes ' ' on the proposi- 
tion to be voted on next Friday. To stand still is costlier than to go 



The Critical Year of i8yS. 99 

ahead. To toss the road overboard, to abandon it, would be the 
costliest of all. 

The old party of soreheads and chronic growlers are working 
against the Two Million Bill. They want all steps in the line of 
progress defeated. They never invest their capital in any public en- 
terprise, but prefer to sit back and criticize men who do. They are 
the men with fixed incomes; the men who own uniihproved prop- 
erty and will only lease on long time and at exorbitant rates. The 
Southern Railroad is a necessity to the city, and all men who have the 
welfare of Cincinnati at heart will vote to give the $2,000,000 asked 
for. 

The same day the newspapers published an address to 
the citizens signed by David Sinton, S. C. Foster, Richard 
Smith, John Simpkinson, William Glenn, John Carlisle, L,. 
A. Harris, John Shillito, Amor Smith, Jr., Robert Mitchell, 
Charles Jacob, Jr., and C. W. Rowland, strongly urging an 
appropriation vote. There had been, and still was, appre- 
hension that two millions of dollars would not complete the 
road to Chattanooga. The opinions of five engineers, and 
their estimates, were cited that the whole line of railway 
could be put in operation for less than that sum — one of the 
estimates running below one million. 

The election held on Friday, May 3, resulted for the 
issue of bonds 11,179; against the issue, 11,349. The total 
vote cast was 22,528, against 31,107 in the regular preced- 
ing April election. As compared with the vote on the six 
million loan the total vote had fallen off 8,228; there being 
a loss in the affirmative vote of 10,254, or almost one-half, 
and a gain in the negative vote of 2,026, or almost a 
quarter. 

The result was not unexpected, and still for a day or 
two the city was stunned. The morning after the election 
the Volksblatt, under the heading "The Glorious Result 
of Yesterday," referred to the "numerous crowd of bum- 
mers, tramps, vagabonds from the work house who, in 
combination with the richest capitalists, millionaire manu- 
facturers and wholesale merchants, had lent their influence 
to the million dollar robbery." On the 7th of May it said: 

fLoFC. 



ioo The Beginnings of the Southern Railway. 

If the Trustees have a spark of honorable feeling they shoufd re- 
sign. If not they should be dismissed by the Legislature, i. Away 
with the Trustees is the meaning of Friday's vote. 2. Hold public 
sessions. Former secresy has been the cause of all the evil, mistakes, 
useless expenditure and corruption. 3. Close investigation. 4. Ad- 
vertising for bids for lease and completion. In some way the city 
should be freed from this elephant. It is a burden we never should 
have taken upon us, a burden we cannot bear. The road ought to be 
completed. We are in favor of this and just as much as those who 
voted "yes," but it ought not to be completed at the cost of taxpayers. 
Private capital can and will finish it. 5. Steps should be taken to 
test the constitutionality of the Six Million Act. We consider these 
bonds an abuse of taxation. 

On the other hand, there arose within three days a de- 
maud for a new bill and a re-submission to the people. The 
Enquirer especially was very urgent, and day after day 
called for a reconsideration. "I,et us see," it said one day, 
"if persoual enmity to the Trustees will lead certain of our 
citizens to be still bitterer enemies of Cincinnati." The 
Chamber of Commerce took up at once the subject of the 
preparation of such a bill. One of the notable opinions of 
the time came from Mr. Reuben R. Springer. He said, un- 
der date of May 6, 1878: 

I feel that our citizens have an elephant on their hands in this 
Southern Railway that has well nigh been our ruin financially, and if 
not skillfully managed may complete it before we are aware of it. I 
am opposed to a further issue of bonds if it can be avoided, as I be- 
lieve that our citizens are laboring under a burden of taxation that it 
would be dangerous to increase, less bankruptcy and general ruin 
might result. 

Mr. Springer's suggestion was that relief should come 
through the Common Carrier Company, whose capital, he 
thought, should be increased to $1,500,000, and of this he 
offered to take one-tenth. 

Mr. Julius Dexter said: "Sell the road to the best 
bidder who will, under sufficient security, agree to finish the 
road to Chattanooga within a year, or some other short 
time — the money to be paid to the Sinking Fund Trustees, 
and applied to reduce the debt and taxation. ' ' Mr. Shoe- 



The Critical Year of 1878. 101 

maker spoke of the "Blackest Friday Cincinnati has ever 
known since the Black Friday when it was voted to build 
the road." Mr. Josiah Kirby said at the Board of Trade: 
'"The vote was rather a vote of lack of confidence in the 
Trustees than a vote against the proposition submitted." 

While the Chamber of Commerce was considering 
opinions and plans, the Legislative Investigating Com- 
mittee was at work, and newspapers w T ere publishing daily 
three and four column reports of the testimony taken. No 
important disclosures were made, and none that went to 
show that money had been improperly diverted from King's 
Mountain Tunnel to Columbus. The charge of corruption 
being disposed of, the only remaining charge against the 
Trustees was that of bad management, which had entailed 
a loss of public confidence in their ability to run the road. 
This feeling was as strong as ever, and resulted in a formal 
inquiry made of prominent attorneys as to whether the 
Trustees could be removed by act of the Ohio General As- 
sembly. To this question a negative answer was returned 
in a concurrent opinion signed by Hoadly, Johnson and 
Colston; Sage and Hinkle, and Paxton and Warrington — 
they holding that the concurrence of Kentucky and Tennes- 
see was also necessary. "This is an exasperating dish to 
spread before an exasperated people," the Gazette said, 
"and it may prove a very dangerous dish beside." 

The bill finally drawn up and accepted by the Cham- 
ber of Commerce was on lines suggested by Mr. S. tester 
Ta3^1or. After providing for a loan of tw T o million dollars, it 
directed the Trustees to advertise for proposals for completing 
the road, and the Trustees were authorized to conditionally 
accept the lowest and best bid, provided it did not exceed two 
million dollars, and provided further that the bond issue 
was authorized by a vote of the people — the sum of $50,000 
being again named for terminal facilities. The bill passed 
the House May 13 by a vote of 47 to 7; was read the second 
time the same day in the Senate, was passed May 14, and 
became a law May 15. 



102 The Beginnings of the Southern Railway. 

While the legislative Investigating Committee was in 
session, one of the witnesses examined was Mr. Ferguson. 
After his examination was over, he made a brief statement, 
in which, after referring to the estimate of ten millions as 
the value of the road, as ridiculous, he said in the Commer- 
cial of May 8: 

In twenty-five years the earnings of the road will pay the debt, 
principal and interest, and the city will be the owner of a magnificent 
property, which will really have cost nothing. I'll promise to go to 
Europe and in six months dispose of the road for twenty, yes, thirty 
millions. The bridge franchise alone is worth a whole million, and 
the franchises of the entire road may be put at thirty millions. 

Two other matters had occurred while the preparation 
of the bill was in progress. 

i. The appointment of Mr. James P. Kilbreath, Mr. 
C. W. Rowland and Mr. Frederick J. Mayer, to investigate 
the conduct of the trust. Mr. William S. Groesbeck was 
originally an appointee, but declined to serve. The Com- 
mission went at once to work, organizing May n. 

2. The advertising by the Trustees for completing and 
leasing the road in accordance with the " plan," as it was 
called. The defeat of the two million bill had perhaps 
served to bring it to the front ; and perhaps the general 
scheme that Mr. Ferguson had had in mind from the first 
had not been lost sight of, but only delayed. The adver- 
tisement called for the opening of bids on July 18. 

Advertisements were also inserted after the passage of 
the Act of May 15, calling for proposals to finish the road 
from Somerset to Boyce Station. These proposals were to 
be opened July 15. On the morning of that day the Gazette 
had a short paragraph which must have brought forcibly to 
the minds of the people the extent of the impairment of the 
city's credit, which Mr. L. B. Harrison had referred to the 
previous winter. The Gazette said : 

The second issue of Southern Railroad bonds sold yesterday at 
97 for 7.30s and 82 for gold 6s, while individuals in good credit can 
borrow money at 5 and 6 per cent. ; while United States 4s are selling 



The Critical Year of 1878. 103 

at par in gold, bonds of the City of Cincinnati, bearing 6 per cent, 
interest in gold, sell at 82. 

A Citizens' Association had been formed, as had been 
some time before foreshadowed by the Volksblatt, and the 
Gazette remarked, citing these bond prices, "it has already 
accomplished a good deal of mischief." 

There were six bids for the completion of the road to 
Boyce Station opened on July 12. On the 18th two bids 
were opened, from B. K. Stone and Chamberlain & Co., for 
the completion and leasing of the entire line. 

Discussing the last two bids, on July 20 the Commercial 
said : 

The question is whether the bids have been made by responsible 
parties. If they have, we have to say, ' ' Take the elephant, God bless 
him, find him, and make him thrive and bring increase, and may you 
live long and prosper." 

And on the 21st it said : 
Mr. Ferguson (1) is against calling upon Cincinnati for any 
more money; (2) he is opposed to the operation of the road by the 
Trustees ; (3) he is in favor of giving the people of Cincinnati another 
open chance to subscribe for the stock of a Common Carrier Company 
to run the road. 

The choice was offered the Trustees and the city 
whether to go forward under the Act of May 15, spend two 
millions, and so far complete the road to Chattanooga as to 
permit the running of trains ; or to proceed under the 
leasing and completing plan of Mr. Ferguson and issue no 
bonds. 

The city was not long in making up its mind — rather 
those were not who were directly in favor of the Southern 
road. The Stone and Chamberlain bids were alike dismissed 
as not worthy of consideration, and a good deal was said 
about Mr. Ferguson's connection with the Stone bid as that 
of an advocate of the bid rather than as a Trustee of the 
city. Nor were the Trustees much longer in coming to a 
decision. On July 24, at a meeting of the Trustees, Mr. 
Ferguson being absent, it was unanimously decided to 
complete the road under the Act of May 15, and on July 



104 The Beginnings of the Southern Railway. 

26 the bid of R. G. Huston was formally declared the low- 
est and best. The amount was $1,671,998.11. The Gazette 
said : 

The action of the Trustees yesterday is well calculated to gain 
for them the public confidence, and all the more because the four 
members demonstrated their ability to act independently of Mr. Fer- 
guson, who has heretofore had the credit of controlling their actions 
very largely. Mr. Ferguson is understood to be a strong partisan of 
the Stone proposition, and finding he could not control the Trustees, 
he refused, or neglected, to meet with them Wednesday or yesterday. 
Mr. Ferguson has lost his grip, and it is well he has. 

Among the interviews published was one with Mr. M. 
M. White, who said he had voted against the ten millions, 
the six millions and the two millions, but he would vote for 
the present proposition. Mr. Sinton did not believe in Mr. 
Ferguson's lease and proposition of completion. Mr. James 
M. Glenn said: "The sixteen millions are now affecting the 
entire business of the city, public and private." 

The action of the Trustees was communicated to the 
Mayor, and an election to confirm the award to Huston & 
Co. was ordered for August 14. 

The Volksblatt said on August 2 : 

We are in favor of getting rid of the road in a sure way. We are 
in favor of yielding it up to the holders of the ten million bonds under 
their mortgage and in indemnifying the holders of the six million 
bonds by other city property. Of course, if the courts will free us 
from apart of the bonds, we would not shed any tears over it; for these 
bonds represent an abuse of the power of taxation which the minority 
need only submit to as long as they are forced. 

On August 6, a petition was filed in the Superior Court 
asking that the Mayor, Auditor and Treasurer be restrained 
from proceeding to cause an election to be held. The Com- 
mercial said: 

The petition for an injunction filed Tuesday is an attempt to dis- 
credit and disgrace Cincinnati, to trample under foot her most sacred 
obligations, and to throw her into moral and financial bankruptcy. 

This application of the Citizens' Association to enjoin 
only served to excite greater activity among the friends of 



The Critical Year of i8j8. 105 

the road, and of the city's credit. Meetings were held, 
speeches were made, and if there was not the old time en- 
thusiasm, there was at least a grim determination to see the 
thing through. 

The election resulted, for the bond issue, 16,224; 
against it, 10,424; total vote, 26,648. As compared with 
the May election, the vote for the bonds had increased 
5,045, and the vote against them had decreased 925. 
Still the total vote was less than the full city vote by about 
6,000. It was a question vastly more important to the city 
than any other municipal issue, and yet in the April elec- 
tion, when the only issue was one that chiefly involved 
officers, the vote was nearly 4,500 larger. 

The comment of the Gazette the next morning was: 

By the vote of yesterday to complete the Southern Railroad, the 
fair name of Cincinnati is saved from the infamy of repudiation; 
the fence with which the repudiators proposed to fence in the city is 
blown away; the credit of the city is preserved, and her future is as- 
sured. 

The Commercial said: 

Now that there has been so emphatic a declaration in favor of 
the completion of the road and so patient a resignation to the weight 
of debt that it imposes, let the work be done at the earliest practicable 
moment. 

On the other side, the Volksblatt said: 

The fight against the two million job will now be transferred 
from the atmosphere of ward politics to the pure air of the courts where 
the tramps and bummers have nothing to say. For the holders of 
Southern Railroad bonds, yesterday may prove a very fatal day. It 
is the straw that breaks the back of the overloaded camel. Two mil- 
lions are more than a straw. 

The fight was taken into court, and both loans were 
upheld, first by the Superior Court, and afterwards by 
the Supreme Court. The litigation worked much harm, 
however, to the city. Mr. Bouscaren said in his "Report 
on the Progress of the Work," January 1, 1880: 

It caused a loss of interest on capital invested and the loss of the 
autumn traffic from the South, which, owing to the sudden revival of 



io6 The Beginnings of the Southern Railway. 

all trades and manufacturers, exceeded for a while the carrying ca- 
pacity of the North and South trunk lines. It was disastrous also to 
the contractors, who had to bear the burden of the great rise in labor 
and material, which did not fairly commence before September. 

The crisis was over. The 14th of August, 1878, was 
the turning point, the critical day, in the history of Cin- 
cinnati. 



The Founder of the Road. 107 

XV. 
THE FOUNDER OF THE ROAD. 

It is more than thirty-two years ago since Cincinnati 
voted to build the Southern Railroad. Men of forty-five 
now were boys of thirteen then. It is twenty-three years 
ago that the decisive vote of August 14, 1878, was cast. 
Men of forty-five now were then but twenty-two. Much of 
what has been quoted must be outside either their recollec- 
tion or their knowledge. The year closed with Mr. Fergu- 
son standing alone. The Trustees were against him, four 
to one. The public was against him. His plan for terminal 
facilities was denounced as extravagant. His plan for com- 
pleting and leasing the road was laughed at as visionary and 
ridiculed as nonsense. An Investigating Commission was 
in session to pass judgment on him. 

How he finally got authority to borrow $300,000 for 
terminal facilities ; 

How he carried out the scoffed-at ' ' plan ' ' for com- 
pleting and leasing, in the midst of universal approval ; 

How he magnificently acquitted himself in the magnifi- 
cent opportunity a hostile, or, at least, an unsympathetic 
commission afforded him ; 

All this is another story. 

The great danger that was predicted when the vote was 
taken to build the road was not, in 1878, realized ; nor has 
it been since that time. It has never been " a great political 
machine. ' ' It has been kept singularly out of politics. Not 
a single appointment to the Board has ever been made as to 
which there has attached a suspicion of politics. It is 
doubtful if there are a dozen men in Cincinnati to-day who 
could tell the political affiliations of either the original 
Board or any other Board that has succeeded it through 
death or resignation. Neither has the present Board, nor 
any other, sought to interest itself in either local or state 
politics. 



108 The Beginnings of the Southern Railway. 

The danger that was not predicted when it was decided 
to build the road was that of cost far exceeding expectation. 
There were no estimates when the people voted to build. 
In the nature of things, there could not have been. The 
ten million dollars was put in to fill up a blank. When the 
blank was so filled, the southern terminus had not been se- 
lected, and nobody knew, or could have known, whether 
Knoxville, Nashville, Chattanooga, or some other point 
would be selected ; nor who would be appointed Trustees, 
whether experienced railroad builders or men who had no 
experience ; nor whether the road the unknown and unap- 
pointed Trustees would build would be a first-class road or 
a fourth-class road ; nor whether a good bond market would 
be met with or a poor one. Still less could it have been 
foreseen that a panic was coming whose effects would last 
four years, and a railroad strike whose harmful influence 
would last another year. No opposition was counted on in 
Kentucky, or anywhere else. 

And yet, this cost that could not be foreseen or calcu- 
lated upon, cost increased, vastly increased, by delays and 
obstacles, was the real source, and has been ever since the 
road was decided on, the great underlying cause of all Cin- 
cinnati's changes of temper. It brought the city to the 
verge of moral and financial bankruptcy. The tremendous 
burden destroyed the moral sense of many, and led many 
men to vain vituperation and repinings. There was one 
year when out of a total municipal rate, including the rate 
for the Board of Education, of 25.20 mills, 12.55 were levied 
for debt and sinking fund purposes, and of this 8.76 mills 
were for the Southern Railroad alone. It speaks well for the 
city that it has borne this burden with the self-denial, the 
patient enduring, it has shown. 

On the other hand, if the danger that was predicted has 
not been realized, and if the danger that was not foreseen 
has been encountered — yes, and triumphed over — the road 
has not realized the expectations that were raised as to 
profit. For years the tax rate went up. The total amount 



The Foimdcr of the Road. 109 

of taxes raised increased between 1872 and 1877 nearly fifty 
per cent. , advancing from three and one-half million dollars to 
$5,200,000. Strong necessit}' forced wretched municipal 
economies, and the city became hideous, with ragged and 
unlighted streets and insufficient service, and a deficiency 
bond issue to pay running expenses. Mr. Ferguson's view 
that in twenty-five years from 1878 the road would have 
paid off principal and interest has not been realized. It has 
cost the city over thirty millions of dollars — and its rental 
was not up to the 15th of October last paying the interest 
on the bonds. 

Neither, on the other side, have there been fulfilled 
the gloomy predictions of the opponents of the road. They 
called it a "disastrous speculation," they would have sold it 
for ten millions or for anything that could be got. The 
prophets of evil, the faint of heart, those who lost courage, 
hope, all these have been proved by events to have been as 
much out of the way as those who saw only the golden side 
of the shield. It will take twice as long as Mr. Ferguson 
predicted before the road discharges its enormous, piled-up 
indebtedness — but it will discharge it, and the millions that 
were poured in after the ten millions will prove not to have 
been good money thrown after bad. In the last analysis 
the Southern Railroad was a gigantic speculation. Like 
most railroad speculations it has turned out to be neither as 
good nor as bad as was predicted. One whole generation 
has endured for it; generations to come will reap from it. 

In the presence of such a problem as the Southern 
Railroad presented consistency of opinion or of action is 
scarcely to be looked for. It was the property of the city 
as ultimately represented by the voters. Personal interests 
of all sorts weighed in the votes rendered at various times, 
and the opinions men expressed. Taxes, cost, hope, despair, 
loyalty, equity, integrity, judgment of men, they all 
played a part in the drama. The quotations which have 
been given — drawn from many a musty file and dust- 
covered report — have not been cited to convict city, news- 



no The Beginnings of the Southern Railway. 

paper, organization, man or men of inconsistency. But no 
man can read them, it is ventured to say, and fail to recog- 
nize the grave risks that were run in 1869, the danger of 
an enterprise such as railroad building being undertaken 
by a municipality when full means for the completion of 
the work depend on the interests or the whims of the 
years. Mr. Hollander says in his intensely interesting 
sketch, "The experiment was unique as it was remark- 
able." So it was as hazardous as it was unprecedented. It 
was not in the power or the capacity of many men to steer 
a straight course in the nine years from the time the build- 
ing of the road was decided on to the decisive vote of 1878. 

But no one can read the history of those years as 
meagerly set forth in the various extracts that have been 
given, and call back to mind what happened in the years 
that came after, and fail to recognize the dominant, con- 
trolling power of one man and his consistency of purpose. 
The man whose ingenuity and knowledge of the law drew 
the first act; who as Trustee thought out a plan for the 
construction of the road which was finally carried out al- 
most to the letter; whose faith never wavered and who 
cheered in times of despondency; whose indomitable 
courage withstood attacks from fellow Trustees, from 
newspapers, from the wealthiest men in the city; whose 
steadfast conviction as to policy sustained him through 
criticism and objection; whose fertility of resource, 
capacity to meet obstacles and overcome them, whether in- 
terposed by General Assemblies or Chamber of Commerce, 
never failed him — Mr. Ferguson is the one above all others 
who, from first to last, hewed close to the line. 

The Investigating Commission's Report occupies 240 
pages, including 190 pages which are devoted to the testi- 
mony of witnesses. The statement of Mr. Ferguson fills 
26 pages. In that statement is to be found the story of the 
Southern Railroad up to 1878. His command of detail, the 
clearness of comprehension and of statement, his knowledge 
that covered the whole field, the frankness of answer, the 



The Founder of the Road. 1 1 1 

wide scope of information, all impress the reader. Judge 
Dickson was Mr. Ferguson's great opponent, and every 
now and then, as has been seen, the city would hark back 
to the Dickson policy of a bonus, as against the Ferguson 
policy of construction. While the two million loan was un- 
der consideration, Judge Dickson wrote one day a communi- 
cation to the Commercial, in which he said: "The Southern 
Railroad will be Mr. Ferguson's monument or ruin. Do 
not remove him; let him finish it." Monument it is — 
more lasting than brass. Mr. Ferguson has influenced 
Cincinnati more deeply, more lastingly than any other man 
who ever lived in it. 



ii2 The Beginnings of the Southern Railway. 



BY WAY OF EPILOGUE. 

On the 1 2th of October, 1881, the Cincinnati Southern 
Railway was leased for a term of twenty-five years to the 
Cincinnati, New Orleans and Texas Pacific Railway Com- 
pany, the cash rental being as follows: 

For the first five years $ 800,000 per annum. 

For the second five years 900,000 per annum. 

For the third five years 1,000,000 per annum. 

For the fourth five years 1,090,000 per annum. 

For the fifth five years 1,250,000 per annum. 

On the 5th of November, 1901, the voters of Cincin- 
nati ratified two propositions which had been adopted by a 
majority of the Board of Southern Railway Trustees and 
subsequently approved by a majority of the Board of Sink- 
ing Fund Trustees. These propositions provide — 

First. For an extension of the lease for a term of sixty 
years from October 12, 1906, with rental as follows: 

For the first twenty years $1, 050,000 per annum. 

For the second twenty years 1,100,000 per annum. 

For the third twenty years 1,200,000 per annum. 

Second. For the issuance by the city of $2,500,000 
bonds for terminal improvements in Cincinnati, at the rate 
of $500,000 a year; and on these bonds the lessee company 
agrees to pay, "as and by way of additional rent," the in- 
terest, and also to pay $25,000 a year as a Sinking Fund 
for their redemption. 

It is also provided in the lease-extension that the rental 
up to July 12, 1902, shall be paid according to the terms of 
the original lease; and after that it shall be paid at the 
rate of $1,050,000 per annum, the remainder, being 
$200,000 per annum, or $50,000 a quarter, to be paid at 
the rate of $40,000 per annum, or $10,000 per quarter, 
with interest at 3 per cent, on the deferred payments. 



By Way of Eplilogue. 113 

The vote or the 5th of November was as follows: 

Yes. No. 

On lease extension 47,486, 15,168 

On terminal bond issue 45,658, 14,603 

The yearly cash rental from October 12, 1901, to 

October 12, 1966, will be as follows: 

1901-1902 $1,210,300 1914-1915 .$1,100,350 

1902-1903 1,094,200 1915-1916 1,099,150 

1903-1904 1,099,000 1916-1917 I >°97>95o 

1904-1905 1,103,800 1917-1918 1,096,750 

1905-1906 1,108,600 1918-1919 1,095,550 

1906-1907 1,109,950 1919-1920 1,094,350 

1907-1908 1,108,750 1920-1921 1,093,150 

1908-1909 1,107,550 1921-1922 1,091,950 

1909-1910 1,106,350 1922-1923 1,090,750 

1910-1911 1,105,150 1923-1926 1,050,000 

1911-1912 1,103,950 1926-1946 1,100,000 

1912-1913 1,102,750 1946-1966 1,200,000 

1913-1914 1,101,550 

Average annual cash rental first 25 years $1,098,874 

Annual cash rental next 20 years.... 1,100,000 

Annual cash rental last 20 years 1,200,000 

Aggregate interest on deferred payments 221,850 

The original cost of the road was $18,300,000. To 
this are to be added cost of bond exchanges about $300,000, 
and aggregate excess of interest over rental amounting now 
to about $12,100,000. The total cost is now approximately, 
therefore, $30,700,000. 

Under the lease-extension the Income of the City for a 
term of sixty-five years will be as follows: 

In Cash. 

5 years at $1,250,000 $6,250,000 

Add interest on deferred payments. . 221,850 

20 years at 1,050,000 21,000,000 

20 years at 1,100,000 22,000,000 

20 years at 1,200,000 24,000,000 

65 $73,47i,85o 

Average annual cash rental $ 1,130,336 

Interest on $18,300,000 6. 176 per cent. 

Interest on 30,700,000 3.68 percent. 



ii4 The Beginnings of the Southern Railway. 

In Cash and Betterments. 

Cash as above $73,471,850 

Betterments — 

1. Terminal improvements 2,500,000 

2. Yearly improvements, reverting to city 

at end of lease ($100,000 a year) 6,500,000 

$82,471,850 
Annual average $1,268,797 69 

Interest on $18,300,000. 6.93 per cent. 

Interest on 30,700,000 4.13 per cent. 



The total outstanding bonded indebtedness on 

account of the Southern Railroad, including the refunding 
bonds, together with the dates of maturity or redeemabilit}^ 
of the bonds, the rates of interest, and the present annual 
interest charge on each issue, is given in the following table: 

RATE. DUE. AMOUNT. INTEREST. 

7s. July 1,1902 $494,ooo $34,850 

7.30s. July 1, 1902 7,644,000 558,012 

6s. May 1,1906. 2,890,000 173,400 

7.30s. May 1,1906 1,865,000 136,145 

7s. Novem. 1, 1908 835,000 58,450 

6s. August 1,1909 • 895,000 53,7oo 

5s. May 1,1910 .... 1,154,000 57,7oo 

4s. July 1, 1911 827,000 33,o8o 

4s. July 1,1921 40,000 1,600 

4s. July 1, 1921 37,ooo 1,400 

Totals $16,681,000 $1,108,147 

Two important facts will be noted in connection with 
this table: 

First — That by May 1, 1906, there fall due $12,893,000 
of these bonds, of which $8,138,000 are payable on the 1st 
of July next; 

Second — That of the entire amount of bonds outstand- 
ing $14,623,000 are high-interest bearing bonds — $9,509,000 
being 7.30s, $1,329,000 7s, and $3,785,000 6s. 



By Way of Epilogue. 115 

The final outcome of the Southern Railroad now de- 
pends on two factors: 

First — The rate, or rates, at which the various issues of 
outstanding bonds are refunded; 

Second — The policy that is adopted — and maintained — 
as to the Sinking Fund. 

As to the rate, the elaborate calculations made by the 
American Audit Company for the Bankers' Club show that 
the final difference to the City between a three per cent, re- 
funding bond for all the issues, and a three and a half per 
cent bond, amounts to about $1, 500, 000. This may be 
fairly regarded as not of high importance in view of the 
magnitude of the amount involved. 

As to the Sinking Fund, this is of great consequence. 
The Audit Company's figures show, on a three per cent, 
basis: 

1. If $86,000 of the annual surplus earnings be used 
as a Sinking Fund, the road will be the unincumbered asset 
of the City in 1966, and will besides have earned — over and 
above the total cost of $30,700,000 — $19,618,876. 

2. If $300,000 of the annual surplus earnings be used 
as a Sinking Fund, the road will be the unincumbered asset 
of the City in 1936, and will besides have earned — above the 
total cost of $30,700,000 — $30,628,211. 

3. If the total yearly surplus be used as a Sinking 
Fund, the road will be the unincumbered asset of the City 
in 1925, and will besides have earned — above the total cost 
of $30,700,000— $33,915,373. 

The Investigating Commission said in its report of 
1379, Page 8: 

If we except the award of contracts, no other department of the 
work committed to the Trustees was so important as the issue and sale 
of Bonds. 

The time has now come when, not the success, but the 
degree of success, of the Southern Railroad depends entirely 
on the policy the City adopts with reference to the redemp- 
tion of Bonds. 



n6 The Begi?mings of the Southern Railway. 

— On page 483 of Hadley's Economics the author says : 
Very few improvements pay for themselves within the time an- 
ticipated. For one case like the Brie Canal, which did better than its 
promoters expected, we have a hundred cases which fail to pay for 
themselves at all, and which leave a burden of interest with no real 
increase of the means of repayment. Witness the enormous increase 
of municipal indebtedness in recent years, and of the burdens con- 
nected with it ; burdens so great as to lead to the enactment of arbi- 
trary provisions limiting the amount of debts which municipal author- 
ities may legally contract. 

The extract gives measure of both Cincinnati's risk 
and Cincinnati's achievement. At the time the undertaking 
was begun, it was the boldest experiment ever made in mu- 
nicipal activity. A generation dared much, and sacrificed 
much. If the next generation has the self-denial to dis- 
charge debt from surplus earnings, there will be henceforth 
no Southern Railroad problem to vex and disturb. The 
determination of 1869 to build, the determination of 1878 
to endure, and the determination of 1901 to extend the 
lease, will be justified by the splendor of results, 




APPENDIX. 



MR. FERGUSON'S STORY OF THE BEGINNINGS. 



From the Cincinnati Commercial, April 19, 1877. 



A large meeting of representative merchants, manufacturers and 
capitalists of the city was held at the office of the Cincinnati Southern 
Railway yesterday afternoon, at the invitation of the Trustees, for the 
purpose of taking steps preliminary to the organization of a Common 
Carrier Company for the operation of the road under the Act passed 
by the General Assembly. 

Mr. John Shillito was called to the Chair and Capt. H. H. Tatem 
appointed Secretary. 

Hon. E. A. Ferguson explained the object of the meeting. He 
said: 

Mr. Chairman and Gentlemen — On the 6th of October, 1871, the 
Davidson Fountain was unveiled. There was a silver-tongued orator 
present, a man of national reputation and a heavy taxpayer of the 
city, who declared that he had looked around Cincinnati to ascertain 
what she yet lacked and had found the "missing ingredient" in 
the beautiful ornament then given to the public. The celebration of 
the supply of another great want will soon be in order. I refer to the 
completion of the Cincinnati Southern Railway. This road has been 
the chronic want of Cincinnati for forty years, and if you merchants, 
and manufacturers, and capitalists are true to your own interests, I 
prophesy that in nine months you can take the cars at Cincinnati and 
in twenty-eight hours reach Pensacola, and taking steamship arrive 
in thirty-six hours at Havana. The Cincinnati Southern Railroad is 
no new enterprise. Its expediency has been considered by our busi- 
ness men for years and years. The Brie Canal project was a hundred 
years old in thought before it was consummated. At that time New 
York was a secondary city to what now is a watering place, the City 
of Newport, R. I. There was a great rivalry between New York, 
Philadelphia and Baltimore for the Western trade, and of the three 
cities Baltimore had the advantage in that with the communications of 
that date she was 200 miles nearer to the West than the City of New 
York and 100 miles nearer than the City of Philadelphia. But the 
building of the Erie Canal and the Pennsylvania System of canals was 
about to rob Baltimore of her trade, and she set to work to ascertain 
what means she could use to restore her to her original place. But of 
that gentlemen, I shall have a little more to say before I close, because 

("7) 



n8 The Beginnings of the Southern Railway. 

before I close I propose to give you the "Tale of Two Cities," and the 
tale of two railroads. I have said the chronic want of Cincinnati has 
been this road and the problem has been how to get it. It was one of 
the earliest of railroad projects. It was agitated by E. D. Mansfield 
and other public spirited citizens as far back as 1835. The first meet- 
ing on the subject was held at the Cincinnati Hotel, on the bank of 
the Ohio river where the Bethel is now, and the projectors of the en- 
terprise procured charters for the road through South Carolina, North 
Carolina and Tennessee, and had, as the Trustees of the Cincinnati 
Southern Railroad have had, a great struggle to get a charter from the 
State of Kentucky. When they obtained the charter from Kentucky, 
it required that there should be three prongs to the road — one going 
to Louisville, one to Maysville and one to; Cincinnati. Under these 
charters a company was organized, but it fell to pieces in the panic of 
1837. From that time until the passage of the Act of May 4, 1869, al- 
though roads were made from Covington to Lexington, and from Lex- 
ington to Danville, nothing was done by Cincinnati toward building a 
Southern Railroad. And why? Because, gentlemen, there was no 
public capital behind the enterprise. Now, it is a fact in the history 
of all these enterprises that without public capital, not one of them would 
have succeeded. The Erie Canal would not be in existence to-day; 
the New York Central, the Erie, the Pennsylvania Railroads, and 
above all the Baltimore & Ohio R. R. would never have been built 
without public capital. In other words, there was in this country no 
accumulated private capital sufficient to cross the rivers and scale the 
mountains between the East and the West. Where can you find the 
accumulated private capital that would have been required to bridge 
the Ohio, the Kentucky, the Cumberland and the Tennessee rivers, 
and build a railroad from Somerset to Emery Junction ? Private capi- 
tal was inadequate in our case just as in the case of New York, Phila- 
delphia and Baltimore. The real question was to get that necessary 
sinew — money. The money could not be procured by the aggregation 
of private capital. Years and years would have passed away and still 
private capital would not have been offered for the great enterprise, 
and it only remained to get capital through public instrumentality. 

I see Mr. George W. McAlpin present, who may recall' the 
origin of the Cincinnati Southern Railway. Its history and that of 
the Ferguson Bill has never been told. Its origin was this gentlemen : In 
July, 1868, I had just finished an argument in the case of Hatch against 
the Cincinnati & Indiana R. R.— one of the most importnnt cases ever 
adjudicated in our courts, involving some three millions of dollars — 
and had gone to New York for a recreation. One evening Mr. Acton, 
Mr. Mayer, Mr. Seasongood, Mr. McAlpiu and myself stood talking at 
the Fifth Avenue Hotel, when Mr. J. W. Sweeney, a freight agent, 
happened along and told them to hurry up their freights, as there was 
to be an increase of tariff. This led to a conversation in regard to 
railroads and the great want of Cincinnati— a Southern railroad. I 
participated in that conversation. The remark was made that, under 
the Constitution of the State of Ohio, the City of Cincinnati could do 
nothing, that we were bound hajid and foot and entirely powerless. I 
said: "Gentlemen, that is a mistake. The City of Cincinnati has as 
much power to do for her public interest as she ever had. The 
only difference is she cannot go into partnership with anybody to 
pursue her objects. You know she owns the waterworks, which for- 
merly belonged to a private company; you know she paid three mil- 



Appendix. 119 

lion dollars to buy the gas-works, which belonged to a private com- 
pany; and yet, although she can own the gas-works and the water- 
works and operate them, she cannot own a dollar in stock in any pri- 
vate company. That is all there is of it. The constitutional prohibi- 
tion is against the city going into partnership, against her becoming 
a stockholder, but as to whatever she may find it necessary to do for 
our public weal, she has as much power under the present democratic 
constitution — for it was so called — as she ever had. ' ' I went on to say 
that when I got home I believed I would draw up a little bill to show 
the gentlemen what could be done. This was the origin of the Fer- 
guson Bill. You know it has been tested on two occasions in the Su- 
preme Court of Ohio. You have raised sixteen millions of dollars 
under it, and you have my word for it, which I shall verify before I 
sit down, that you have a railroad ready to be placed in your hands on 
the same footing to the citizens of Cincinnati as the Baltimore & Ohio 
road. If there is any failure it will be for the want of business patriot- 
ism and pluck on the part of the merchants, manufacturers and capi- 
talists of Cincinnati. 

What was this Ferguson Act ? It was a very simple thing. It 
was that the City of Cincinnati should raise the necessary capital to 
build the road herself. How was it to be done ; what was the plan ? 
When you start out to borrow money you must have credit, you must 
have faith. If you had gone into the markets and asked money with 
a Board of Trustees subject to elections, subject to the changes which 
come over every community engaged in a great undertaking like this, 
we should have failed. The organization of the Croton Board of 
Waterworks was changed three or four times, although the Board was 
appointed by the Governor. DeWitt Clinton was at one time thrown 
out of the Canal Board, but the people took him up and put him back. 
A delegation was elected from the City of New York to the General 
Assembly to repeal Clinton's Law, and filled up the "damned dry 
ditch," as they called it. I knew the history of the public occurrences 
and saw the necessity for a trust fund, the Trustees to be appointed by 
the Court and to continue in office as long as they faithfully discharged 
their duties, and until they finished the road. This the Bill provided, 
and it also provided that if any citizen and taxpayer had anything to 
say against any Trustee, he might go to the City Solicitor and make 
his complaint, and go to the Court and have him removed, if his com- 
plaint was well grounded and the Solicitor failed to make it. It was 
a constant Board. It was appointed once for all time to do the work. 
But that was not all, gentlemen. The Act said to the capitalists : 
" When you loan your money to the City of Cincinnati for the build- 
ing of this road, it is to be devoted to that one object, and cannot be 
diverted. It is a trust fund to build the Southern Railroad, and not 
connected with the general municipal fund." In other words, Cin- 
cinnati went to the capitalists of the world and said : " We have con- 
stituted a Board of Trustees. Primarily, they are your Trustees, be- 
cause you will lend them your money to build the road ; they are 
immovable except for proper cause, and for the money you lend them 
they will pay you not to exceed 7.3 per cent, interest." Primarily this 
road belongs to the trust fund and to the bondholders, and the solemn 
Acts of the State of Ohio, of Kentucky and of Tennessee created a 
bond between bondholder and yourselves which has been sanctioned 
by the judicial determination of the courts of all three states, and it 
will be sustained by the Supreme Court of the United States if ever 



120 The Beginnings of the Southern Railway. 

snbject to the investigation of that tribunal. This fund is secured, 
and so are you secured. This is the way the problem has thus far 
been solved. Sixteen million dollars have been raised, but we have 
come to that point, gentlemen, where more money is necessary to 
build and equip the road, and where, likewise, we have 160 miles of 
as good road as there is in this country. 

That much of the road is completed and ready to be run. The 
real question is, as it was in the beginning, how to raise the necessary 
funds to operate the road. To me, gentlemen, there is no difficulty, 
unless I find it here in the City of Cincinnati ; but I can say to you it 
will not be found elsewhere. If you will let the road pass out of your 
hands, you may be sure it will find takers. It is too good and too 
valuable a thing not to be taken and used. As to our powers, let me 
say here, with the exception of the power to raise more money, there 
has been no power added to that given the Trustees by the Act of May 
4, 1869. That act provided that as fast as portions of the line were 
ready to be run, the Trustees should have power to make leases and 
licenses and make arrangements to have it run. Not, you understand, 
to run it themselves. That is a very different thing. There was no 
necessity for any addition to that power. The original bill was com- 
plete aud perfect within itself. The Trustees had' the power under 
that original act, when the whole line was completed to make a lease 
of it in its entirety when all these temporary leases or licenses were to 
fall out. What has been done in the recent legislation is this : We 
had no power under the original bill to make a contract to complete 
and lease the whole line. But by the Act of April 18, 1873, known as 
the Wright Bill, that power was given us. If it had not been for the 
panic of that year the Trustees never would have made a single con- 
tract to do the detailed work of building the road. We would have 
been a passive board from the beginning. But the panic of 1873 wiped 
out of existence almost the entire railroad capital of the country, and 
the distress of railroad corporations which sprang up made it impossi- 
ble for us to find a company to take hold of and build and lease the 
road. It became necessary for the Board of Trustees, therefore, to 
enter upon the work. The question was put to me in an interview 
with a newspaper reporter during the panic, " Won't the panic put a 
stop to the Southern Railroad? " I said, " No ; that the City of Cin- 
cinnati could raise just as much money as she ever could ; that there 
was just as much money as ever ; all that was required was credit." I 
said we would raise the money and build the road. Well, gentlemen, 
it is a curious fact, but it is a fact nevertheless, that when, on the 13th 
of December, 1873, the Trustees closed the contract for building King's 
Mountain Tunnel for $160,000, they had neither money nor credit. 
The money was raised by Miles Greenwood, Philip Heidelbach, R. M. 
Bishop and myself — for Mr. Hooper was abroad — putting our names 
to a note for $5,000 and having it discounted by the First National 
Bank. That was the start of the Cincinnati Southern Railway. 

We have now the power under the recent Act, before the road is 
completed, to make a contract to build and lease it. The City of Cin- 
cinnati is the party of the first part, so to speak, represented by her 
Board of Trustees of the Southern Railway, and there is a very just 
expectation that the other party, the party of the second part, that 
shall hold and control the road, will be in the interest of the city, 
which has furnished a basis capital of $16,000,000. It is right and 
proper that it should be so, and it will be so if the merchants, manu- 



Appendix. 121 

facturers and capitalists and the corporate interests of Cincinnati in- 
terested in this road will themselves take hold and furnish a com- 
paratively smail amount of capital to do the work. Speaking for my- 
self, and not for the Board, I think the taxpayers of Cincinnati have 
done their part, in furnishing $16,000,000, and I think the interests I 
have named should now step forward and do their part. But they 
would be powerless if there was no law under which they could or- 
ganize and aggregate their capital; and we had no such law as that, 
although it was written and given to the public January 27, 1876, un- 
til the Common Carrier Act was passed a few days ago. That Act 
enables capitalists to form a company and lease and operate the 
finished portion of the road. That is, or should be, the party of the 
second part. Gentlemen, let me say in regard to this Carrier Act you 
may search the statute book of this country and of England and you 
will find no such a liberal charter as this is. To my knowledge, and 
it has been pretty extensive in twenty-five years experience in cor- 
poration law, there is nothing like it to be found in any statute book. 
It is full, ample and liberal. . . . 

L,et me now consider the road as a local road. As a local road it 
is finished as far as it should go. It is built to Somerset, 160 miles. 
A few miles beyond that it becomes a through road. I hold in my 
hand two estimates as to the amount of rolling stock that will be 
necessary for the company simply as a local organization to have; one 
is by Mr. L,ovett amounting to $468, 200, the other by Mr. Webster 
amounting to $318,900. That is what would be necessary — not to 
start with, but what would be required in the judgmeut of these men 
to transact the business of the road as a local road. You can begin on 
the first day of May with two passenger coaches— and let me say to 
you they are already built and ready for somebody to come forward 
and take them. All that is wanted to go forward now is a compara- 
tively small amount of capital to enter upon this portion of the road. The 
Trustees have four locomotives, for all of which they will have no use. 
They have eighty flat cars, and if they kept the road in repair would 
not need all of them. There is no difficulty whatever in organizing 
promptly and in getting the road into operation. You can lease the 
rolling stock for the road from the companies devoted to that business 
and commence at once. It may be asked what effect the leasiug of 
the road for local purposes will have on the completion and final 
leasing of the road. The Trustees will provide that the company 
which shall take the final contract shall take at a just valuation the 
rolling stock of the temporary company if that temporary company 
should not get the final contract itself. There is no risk to run on 
that score. If the company starting out to run the road on a capital 
of $500,000 should see fit to complete the road and finally lease the 
whole line, it is authorized to increase its capital stock in order to do 
so. Is this a great undertaking for the City of Cincinnati and for 
the business men and capitalists of Cincinnati ? . . . 

I have always said when the proper time came and our merchants, 
manufacturers and capitalists were called upon they would respond. 
They are called upon to do only a twenty-fourth part of what Balti- 
more did, and would there be any Baltimore worthy of the name to- 
day if it had not been for the Baltimore & Ohio Railroad ? 

Mr. Ferguson then proceeded to consider the road as a through 
road, and remarked that when the road was completed a passenger 
could get on the cars here and be in Havana in three days. Cincin- 



122 The Beginnings of the Southern Railway. 

nati he said is about the center of the population of the United States 
and he dwelt upon the great advantages the city would derive from a 
close connection with the Southern States and the rich countries to the 
south of us, laying considerable stress upon the fact that the Southern 
Railroad would be a connecting link between the southern and north- 
ern railroad systems. 

Mr. Ferguson moved, in order that the object of the meeting 
should be carried out that there be a committee of twenty-five ap- 
pointed by the Chairman consisting of representatives of the mer- 
chants, manufacturers and capitalists of the city and the corporate 
authorities to organize a Common Carrier Company for the operation 
of the road. The motion prevailed and the Chairman appointed the 
following committee'. 

Messrs. Carl A. G. Adae, John Waddle, 

David Sinton, A. T. Goshorn, 

William Glenn, Benjamin Eggleston, 

A. D. Bullock, Josiah Kirby, 

W. W. Scarborough, Jacob Elsas, 

J. L. Keck, A. H. Mitchell, 

Lewis Seasongood, L. A. Harris, 

George W. McAlpin, A. Hickenlooper, 

C. W. West, Wm. S. Munson, 

N. Macneale, Gazzam Gano, 

R. M. Shoemaker, C. W. Rowland, 

M. E. Ingalls, John Shillito, 

H. H. Tatem. 




V .» 







.4 3* 









w . jfc- \/ .^B£. %^ / 

C. ^p 

>„ A.^fe.% ^\^-.% ,o*...^*o, 




o V 





^o< 




,0 



. •,♦♦*% : -Sr- /\ *»P ^\ : 

/,:S&\> /^mkS.. j*\-&&.\ 







ok :*W£«i; '^o^ :j£K%Qp'* "of f^c^K 1 : ^^ 






.CV - " • o^ ^J> <> e s • • , 



l0^ 



* .o 1 



\ W ♦♦ 











^ ^ 







^ _< 






^°^> </^.% o°\^.% 



r oV l 












v 





*V ** \g 

^ ^Kl^ -r 



